Posted 12 February 2014
Report: Consumer confidence on the up due to strong retail and property sales, and positive employment news
The Consumer Market Monitor for Q4 2013, jointly authored by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland, shows consumer confidence is at an “exceptionally high level” on the back of positive news on employment, strong retail sales figures, and an increase in property transactions.
The Monitor relies on a model of consumer behaviour which sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influences consumer behaviour including spending, saving and borrowing.
The Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources.
According to the Monitor, consumer confidence picked up considerably throughout 2013, with confidence up five points in the first half of 2013, compared to the same period in 2012. The second half of 2013 continued in an upward direction, reaching a seven year high of +5 in December. This positive momentum is continuing into 2014, with confidence rising to +10 in January 2014.
“Consumer spending accounts for over 60% of GNP in Ireland and is a critical factor in driving any recovery of the economy,” said Professor Mary Lambkin, UCD Smurfit Graduate School of Business, one of the authors of the Monitor.
“Consumer spending is affected by the combined influences of how much money people have available to spend coupled with their confidence in spending it. Disposable incomes for households are still under pressure but a number of factors have led to an increase in consumer confidence.”
“Positive news in the employment and property markets, strong retail sales in December, better economic stability following our exit from the bailout and an easing of fears about austerity measures are all starting to filter through to the economy,” she added.
Tom Trainor, Chief Executive of The Marketing Institute of Ireland, said: “Improvement in the jobs and property markets, combined with perceptions that the economy is improving since our exit from the bailout, are contributing to consumers’ willingness to spend more. While there is a sense that the overall economy is improving, disposable incomes and personal finances are still a major concern for many.”
“The Central Bank is forecasting a modest increase in consumer spending of 1% for 2014 and 1.3% for 2015, but improving indicators may come closer to matching the wider forecast of GNP, which is expected to grow 2.2% this year and 2.5% in 2015.”
To download the full report, visit www.mii.ie/cmm
(Produced by UCD University Relations)
