Household disposable income rises by 8 per cent

Improvement is being driven by an increase in earnings and lower taxes

 The disposable income of Irish households recorded an 8 per cent annual increase in the third quarter of last year. Photo: Bloomberg

The disposable income of Irish households recorded an 8 per cent annual increase in the third quarter of last year. Photo: Bloomberg

 

The disposable income of Irish households recorded an 8 per cent annual increase in the third quarter of last year, according to the latest figures from the CSO. This is an increase from the 5.5 per cent annual rate recorded in the second quarter.

“ The improvement is mainly being driven by a 3.8 per cent annual increase in compensation although lower taxes are also helping, “according to a commentary on the figures from Goodbody stockbrokers.

The figures show a 2.9 per cent rise in disposable income between the second and third quarters. A smaller 1.4 per cent quarterly rise in spending by households over the same period meant that the savings rate also rose, showing come continuing caution and a ongoing desire to pay down debt and repair household balance sheets.

” While disposable income has now been recovering since the second quarter of 2014, it remains around 7 per cent below its 2008 peak,”according to the Goodbody’s analysis.Its note said that the increase in disposable incomes and the paying down of debt had improved the ratio of household debt to disposable income,which has fallen to 167 per cent from a peak of 214 per cent in 2011.

Disposable income bottomed out in 2011/2012 under the burden of job losses and higher taxes but has recovered since mid 2014.

The CSO figures add to other recent data showing a rise in wages and a steady increase in consumer spending in recent months.Recent data from the KBC/ESRI index have also shown consumer confidence at a 10-year high.