Consumers having a ‘good rather than a great’ economic recovery

KBC survey suggests return to boom-time conditions still ‘remote’ for many people

Year-on-year growth in Irish comsumer spending inched up 2.5 per cent in 2017, Visa said, with online shopping rising 7.4 per cent in the year.   Photograph:  Dominic Lipinski/PA Wire

Year-on-year growth in Irish comsumer spending inched up 2.5 per cent in 2017, Visa said, with online shopping rising 7.4 per cent in the year. Photograph: Dominic Lipinski/PA Wire

 

The Irish consumer is seeing a “good rather than a great economic recovery” a new economic survey suggests, which notes that while consumer sentiment remains positive, a return to boom-time conditions still seems very remote from many peoples’ experience.

According to the KBC Bank Ireland/ESRI consumer sentiment index, sentiment was effectively unchanged in December, indicating a reasonably positive assessment of the Irish economy, even if most consumers see only limited progress in their personal financial situations of late. The index stood at 103.2 versus 103.6 in November, and significantly higher than the 2016 exit reading of 96.2.

However, figures from payments company Visa pointed to an almost 5 per cent increase in spending during the month of December compared to 2016.

Year-on-year growth in Irish consumer spending inched up 2.5 per cent in 2017, Visa said, with online shopping rising 7.4 per cent in the year.

“The increase in Irish consumer spending is reflective of the strides being made in the labour market with the unemployment rate continuing to fall and average weekly earnings continuing to rise,” Philip Konopik, Visa Ireland country manager, said.

Commenting on the KBC Bank Ireland report, chief economist Austin Hughes said: “While there is relief at widespread evidence of a strengthening Irish economy, it seems that many consumers still feel quite removed from the pick-up in personal finances that such buoyant economic conditions would traditionally deliver.”

On Monday a report from IBEC indicated that Irish household wealth is better than it has ever been, but as Mr Hughes noted, “for most consumers, reports of a return to boom-time conditions seem very remote from their own experience”.

Indeed the survey showed that the slight drop in Irish consumer sentiment in December was prompted by a somewhat weaker assessment of the outlook for household finances. Unusually, the report shows that slightly fewer consumers see their own financial circumstances improving in the next twelve months (26%) than feel their circumstances improved in the past twelve months (27%).

Looking ahead, the authors of the report expect some uptick in sentiment in January on bargain hunting in post-Christmas sales and a measure of New Year optimism.

“While uncertainties are potentially making households wary about their own personal financial circumstances for the coming 12 months, the broader economic recovery is certainly filtering through into a more positive consumer sentiment relative to 12 months ago,” Philip Economides of the ESRI, said.