Consumer sentiment showed a significant and somewhat surprising rebound in November which may signal a stronger outlook for Christmas spending.
The latest KBC Bank Irish consumer sentiment index jumped to 65.5 in November from 52.6 in October, returning the index to its strongest level since March.
However, the November reading still remains substantially below both its early 2020 reading of 85.5 or the average of the 25 year survey of 87.
KBC Bank Ireland said the November bounce may be as a result of a spate of strong economic releases and several new job announcements during the survey period.
It also said that consumers may be focussed ahead on the prospect of some Christmas light at the end of a pandemic-related tunnel.
But the bank also highlighted the “choppy nature” of survey readings in recent months as consumers in Ireland and elsewhere attempt to make sense of an unprecedented and very uncertain environment.
“It should also be emphasised that the level of the November sentiment reading still points to a cautious and likely confused Irish consumer,” KBC Bank Ireland’s chief economist Austin Hughes said.
KBC noted that all five main elements of the consumer sentiment index showed material improvements between October and November but the gains were most pronounced in relation to the macro components of the survey.
It said the pandemic has imparted a severe macro shock on Ireland and elsewhere but the intensity of impact across age groups, regions, employment categories and the income distribution has varied widely.
Therefore the “personal” elements of the survey have seen a smaller if still substantial weakening, the bank added.
“Although it is vitally important to counter threats to the immediate outlook and support sentiment and spending over end-year, an economy is not just for Christmas,” Austin Hughes said.
“The key task must be to ensure the policy framework develops in a manner that limits the longer term threat to jobs and incomes as well as health outcomes,” he added.