The latest Dublin Consumer Sentiment Index has just been published. Conducted by the ESRI and KBC Bank Ireland, the purpose of the index is to measure and track consumer sentiment in the capital. It is based on consumers’ views of current conditions plus their future expectations. The index tracks Dublin and Outside Dublin.
The overall trend (Fig. 1) was of a peak in consumer sentiment around 2005-2006, followed by a collapse to a low point during 2009-2011 and gradual recovery since.The latest publication for Quarter 1 2016 finds that consumer sentiment in the Dublin area improved significantly since the previous quarter, but that confidence among consumers in the rest of Ireland was largely unchanged.
The overall sentiment index is composed of both views on Current Conditions and Consumer Expectations. One of the main reasons for improved consumer sentiment in Dublin was positive expectations of future prospects in the jobs market (Fig. 2). During Quarter 1 2016 over 58% of Dublin consumers felt that labour market conditions would improve over the next year, with under 14% expecting a deterioration. A positive buying climate for major household durables was the other main cause of rising consumer sentiment in Dublin.
In contrast, future expectations among consumers outside of Dublin dis-improved (Fig. 2). They had greater concerns about the labour market outlook and the economy in general over the next 12 months. The WDC’s recent WDC Insights publication Jobs Recovery and the Western Region highlighted the fact that jobs growth in the Western Region is slower than in the rest of the state. This seems to be borne out by consumer expectations among people living outside of Dublin. Their view of prospects in the labour market seems to be one of the main differentiators among people living in and outside of Dublin.
While the region’s slower jobs recovery impacts directly on employment, unemployment and income, it also has wider implications in terms of consumer sentiment and their decisions on purchasing, investment and savings. Consumer behaviour has a major impact on locally traded services which rely on consumer spending, such as retail and hospitality. Any decline in consumer sentiment reduces the prospects for jobs growth in these sectors further reinforcing the region’s slower jobs recovery. The sectoral pattern of recent jobs growth in the region will be examined in an upcoming WDC Insights publication.