Davy predicts rise in consumer spending as household incomes grow

Davy predicts rise in consumer spending as household incomes grow

Research by J&E Davy shows that there was a rise in household incomes last year up to the end of September.

The data released by the Central Statistics Office reveals that households enjoyed 5.2% growth in disposable incomes, with wages per head up 2.7%.

Davy said that the higher incomes were helped by job gains and tax cuts.

They have predicted a 3% increase in consumer spending this year as a result.

However, Davy say that households are still cautious and estimate that household debt fell €3.7bn to €142bn by the third quarter of 2017.

This means that the household debt-to-disposable income ratio fell to 135%, down from 145% in the third quarter of 2016.

The researchers forecast a pick-up in house building after December’s Construction PMI stood at 58.0, the fastest pace of expansion in six months.

The Construction sector is expected to grow by double figures again this year.

A survey from consultancy firm AECOM shows the industry will experience another boom after a strong performance in 2017.

AECOM's John O'Regan outlines the figures in the company's annual review of the industry.

Mr O'Regan said: "For the last five years we have been reporting on growth in the construction industry, in 2017 it was growth of around 18% in value, and in 2018 we are forecasting growth of around 14%.

"One thing to be conscious of is that's coming from a low base and we're still catching up on the years after the crash."

Business group IBEC is strongly supporting proposals for new tax measures to boost the country's housing supply.

A VAT reduction was among a number of measures backed by AIB bank at the weekend, in a bid to support developers and cut construction costs.

IBEC's Fergal O'Brien says the shortage of residential property is one of the biggest challenges facing our society.

He said: "Some progress is being made, but we think we probably need some fresh thinking around making housing more affordable and giving greater incentives for developers to go out there and deliver on the housing market.

"We need to look at fiscal incentives again, things can be done in the tax system that will reduce the cost of residential property. That will encourage more supply and ultimately will improve affordability for people looking for a home."

- Digital desk

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