The month of May 2011 saw an increase in the consumer sentiment index operated by the ESRI and KBC Bank. It has increased from 57.9 in April to 59.4 in May. So far this year, apart from a dip in April, the consumer sentiment index has increased month on month from just 48.7 in January to 59.4 in May (it reached 59.5 in March but the fall in April reduced the index). This suggests that consumers are starting to form a more positive outlook, but it is still very low compared to even the figures observed at the start of 2010.
The Consumer Sentiment Index is comprised of two sub-indices; an index of consumer expectation that focuses on how consumers view prospects over the next 12 months and an index of current economic conditions, focusing on the present situation. There has been a decline in how the current economic conditions were viewed, with this falling from a figure of 81 in April to 72.1 in May. But consumers are viewing the future prospects of the economy positively, being up from 42.3 in April to 50.8 in May.
Justin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland.