Irish consumer sentiment remained largely unchanged in September, signalling a ‘watch, wait and worry’ mindset, as consumers prepared for Budget ’25.
The latest Credit Union Consumer Sentiment Survey, compiled by Austin Hughes in partnership with Core Research, showed an index reading of 71.9 for September.
This was effectively the same as the August index of 72.0.
The September reading also suggests that the momentum of progress evident in the June and July surveys – with July seeing the highest index since January 2022 – has now faded.
Following depressed levels of sentiment, starting with Russia’s invasion of Ukraine in 2022 and continuing through 2023, recent months suggest that Irish consumers do not sense that things are getting notably worse.
However, there is little sense that Irish consumers believe that things are getting much better, either.
The sense of economic ‘limbo’ is further exacerbated by September’s level of 71.9 landing far below the long-term survey average of 84.4.
Abroad
In contrast to the consistent reading in Ireland, the US reported a second consecutive monthly increase in sentiment, according to the preliminary reading of the University of Michigan’s Consumer Sentiment Survey.
This led to sentiment reaching its highest level since May.
In the Eurozone, the early-September reading saw a reversal weakening of confidence in August, with the EU Commission noting that the latest reading showed that consumer confidence had almost caught up with its long-term average.
A September interest rate cut was likely to thank for this.
In the UK, consumer confidence unexpectedly tumbled in September, to its weakest level since March.
Fears of the prospect of a very tough UK Budget on 30 October were seen as central to the drop in UK consumer sentiment.
The Financial Times quoted former Bank of England chief economist Andy Haldane when he said on Sky News that the government had “generated a fear and foreboding and uncertainty among consumers, among businesses, among investors in UK plc.”
Mixed Survey
According to Austin Hughes, three of the five main elements of the Credit Union Consumer Sentiment Survey posted month-on-month improvements in September, while the remaining two posted declines.
The combined sum of the declines exceeded the sum of the gains, leading to an overall drop in consumer sentiment.
While the 12-month outlook for the economy, household finances and activity improved, consumers remained concerned about employment prospects and several recent redundancy announcements.
Although these evened each other out somewhat, Hughes noted that more Irish consumers are still of the view that their household financial circumstances have worsened in the past 12 months than those who believe that they have improved.
On a positive note, Irish consumers were less negative about the outlook for household finances in the year ahead in September than they were in August.
Budget
Ahead of the Budget, consumers are focused on infrastructure, particularly in the health sector and housing.
There was a significant jump between the two surveys on the importance of transport infrastructure, cited by 15% of consumers this year, compared to 10% in September 2023.
Unsurprisingly, the cost of living remains a key concern for the upcoming Budget, though the increased concern this year, compared to last year, could indicate a cumulative strain following several years of high living costs.
Other high-priority concerns include high energy costs, easing taxes, raising welfare rates, setting aside funds for an aging population, and maintaining stability.
While some might consider that these reflect a lack of understanding of risks on the part of Irish consumers or a failure to recall the recent financial crisis, others may say that consumers regard such threats as less fundamental than current failings in infrastructure.
Speaking about the survey, the CEO of the Irish League of Credit Unions, David Malone, said, “The steady if subdued sentiment reading for September hints that Budget ’25 could have a very important influence on Irish households in the coming months.
“The survey also highlights the widely varying financial circumstances across the spectrum of Irish consumers at present.
“Whether it’s help in managing current challenges or in building a brighter future, Irish consumers can rely on their local credit union to help them when it matters.”
Read More: Irish Consumer Sentiment Rises In July For Second Consecutive Month
