Consumer spending to aid economic growth despite August dip
Latest retail sales data, published yesterday by the CSO, showed consumer spending volumes fell by just under 3% in August, when compared to July.
However, when vehicle transactions are excluded, a 0.3% increase was noted.
Overall, August’s data shows a year-on-year increase of 6.8% in retail sales volumes, with spending up by just under 4% when car sales are stripped out.
According to the CSO, electrical goods, furniture and lighting and bars/pubs saw the largest upward movement in sales activity in the month.
In terms of sales value, August saw a 1.3% monthly decline, but an annualised increase of 5.3%.
August’s monthly volume decline was anticipated following a strong July, which was primarily driven by the new 142 vehicle registration plate.
However, David McNamara of Davy Stockbrokers said the latest figures show that the underlying picture is positive and that they point to another solid quarter of spending growth for the three months to the end of September.
“In the second quarter, consumer spending was up 0.3% on the quarter and 1.8% on the year. So the consumer has finally joined the recovery. We expect a 1.5% rise in consumer spending this year, accelerating to 1.9% in 2015,” he added.
Merrion Stockbrokers is also forecasting a 1.5% rise in retail sales volumes for 2014.
“A key issue, going forward, will be the state of the labour market, and the signs are encouraging on this front,” said Merrion’s chief economist, Alan McQuaid.
Retail Excellence Ireland said the spending recovery is more sectorally -based than universal and said a broader-based recovery is reliant on a positive Budget 2015 for consumers and retailers, alike.
Meanwhile, the Central Bank yesterday published new research on consumer spending, noting that a 10% increase in personal income leads to around an 8% rise in consumption activity.
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