Consumer confidence in Ireland improved in May, though sentiment continues to sit far below historical averages, as ongoing geopolitical tensions and economic uncertainty weigh on households, according to a new survey.
The Credit Union Consumer Sentiment Survey rose to 59.4 in May, recovering from April’s 40-month low of 53.3. Despite the monthly gain, the index remains significantly under its long-term average of 83.3, underscoring continued caution among consumers.
Economist Austin Hughes, who compiled the report, said the rebound was encouraging but limited in scope.
“It’s a pleasant surprise and it suggests that consumers are down, but they’re not entirely out,” Hughes said. “It’s telling you that consumers here are still quite nervous and negative. No surprise there.”
The report attributed the improvement partly to a temporary easing in Middle East tensions and government signals on energy support measures. Analysts also pointed to expectations of further fiscal assistance in the upcoming October budget as a factor lifting sentiment.
“The improvement in May probably reflects the slight easing in tensions we saw at the start of the month on global markets,” Hughes said. “Probably more importantly in the Irish context, I think to the Government measures and the promise of more substantial measures to come in the October budget.”
Sentiment strengthened across all categories of the survey, including household finances, broader economic expectations and employment prospects. The outlook for jobs recorded the most notable improvement, although Hughes cautioned that this likely followed a sharp drop in April rather than a sustained recovery.
Despite the monthly gain, respondents remained broadly pessimistic about the direction of the labour market.
“That’s really the bellwether in terms of the economy,” Hughes said. “Consumers tend to get totally confused by GDP, GNI, modified domestic demand, all these barometers. But they can see and understand what’s happening on jobs.”
He warned that weakening household finances later in the year could feed into reduced hiring by domestic firms, increasing pressure on employment conditions.
“If things go pear shaped later in the year in terms of household finances, then that will also translate into a weaker jobs market because domestic firms will not be hiring,” he said.
The survey also examined how households would respond to an unexpected €1,000 expense. Around 40% said they would rely on savings, while others indicated more difficult coping strategies.
Thirteen per cent said they would be unable to meet such a cost, 7% said they would sell possessions, and 6% would turn to non-bank lenders. Hughes noted that roughly one in four households appeared financially vulnerable, while only about half reported being in a comfortable position.
