Rise of 6% in household income fuels consumer spending
Confidence still strong despite Brexit and certainty concerning sustained recovery
A tangential factor driving spending power is wage increases which added an average of 2.7% to household incomes last year. Photograph: Getty Images
Household income in the Republic jumped by 6 per cent in the first quarter of 2016, pumping an extra €5 billion into the economy and taking consumer spending power to levels not seen since the height of the boom, new figures show.
Consumer confidence also remains strong despite Brexit and widespread certainty about a sustained recovery has driven spending and led to a jump in sales across virtually all sectors, according to the latest Consumer Market Monitor from the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland.
A significant upturn in the labour market has driven household income growth with 1.98 million people at work now, up 46,900 year-on-year and an increase of 152,000 since the low point in 2012.
Another factor driving spending power is wage increases which added an average of 2.7 per cent to household incomes last year and contributed to disposable income.
The report also shows household debt falling to its lowest level since 2006. It now stands at €32,269 per head, falling at a rate of about 2.4 per cent each year. The ratio of household debt to disposable income has fallen 60 per cent since its peak of 215 per cent in mid-2011. While the rate of debt reduction surpasses most other countries, it remains high at 167 per cent of disposable income.
The monitor suggests recovery and expansion of the consumer economy is “well established” and while there was “a slight weakening in confidence” during the first half of 2016 it remains strong “and bodes well for continuing economic activity”.