Consumers continue to signal confidence

For fifth successive month, Irish consumers are taking an increasingly upbeat view of the Republic's economic prospects for the coming year.

Consumer confidence has improved for the fifth successive month, according to the latest Irish Times TNS mrbi survey.

It shows that the number of people now expecting conditions to improve over the next year almost matches those anticipating a weakening, a dramatic turnaround from last summer when the pessimists outnumbered the optimists by a margin of 10 to one.

The latest Pulse consumer monitor survey, taken between January 14th and February 5th, shows that 26 per cent of respondents expect employment levels and the economy to improve over the next 12 months, compared to 29 per cent who expect conditions to worsen. A significant number of those surveyed - 42 per cent - expect conditions to remain the same and 3 per cent were "don't knows."

This is a continuation of the improving trend evident in recent months which has continued since the August survey, which showed 70 per cent expecting conditions to weaken and just 7 per cent anticipating an improvement.

The low point in confidence last summer coincided with the announcement of a string of job losses. Since then, there have been clear signals of an improved economic climate internationally and at home and there is evidence that this is clearly boosting confidence.

The survey, conducted as part of a TNS mrbi monthly telephone poll, asked respondents: "Thinking about the year ahead, do you think employment levels and the Irish economy in general are set to improve, weaken or remain the same."

The figures show that confidence is highest among men and among those classified as "AB" status.

Some 31 per cent of males surveyed expect conditions to improve over the next 12 months, outnumbering the 28 per cent who expect things to disimprove.

The picture is reversed amongst females, with 32 per cent expecting employment levels and the economy to worsen against 20 per cent anticipating an improvement.

Looking at the traditional definitions of social class, the AB group shows a strong positive view, with 34 per cent expecting conditions to improve and 25 per cent anticipating economic decline. Regionally, Dublin is the only part of the State where the optimists prevail, albeit narrowly, with 28 per cent expecting an improvement and 27 per cent predicting a fall-off.

The most pessimistic region was Connaught/Ulster, where 32 per cent expect conditions to get better, against 23 per cent anticipating an improvement.

Analysts will be watching to see whether the improving confidence feeds through to retail sales. Sales and consumer spending were subdued for much of last year.

The latest retail sales figures - relating to last November - showed a 2.9 per cent annual rise in value and a 1.2 per cent volume increase over the same month in 2002.

The next figures will be an important indicator about spending in the run up to Christmas, with retailers saying consumers remained relatively cautious over this key sales period.

Improving confidence and low interest rates may also help to underpin the housing market, where spending has remained buoyant over the past couple of years, pushing prices higher.

The breakdown of the latest Pulse survey suggests that those in business - or in the workplace - are the most optimistic. This indicates that many companies are starting to see improved conditions. Among those classified as "chief income earners", 28 per cent expect conditions to improve, the same number anticipating a weakening.

The balance among those counted as business people was positive, with 30 per cent optimistic about the year ahead and 27 per cent taking a pessimistic view.