Consumers and startups point to 2017 growth

Ostensibly booming pre-Christmas retail sales data capped a good week for the economy, as surveys on the services industry and start-ups pointed to a good start for 2017.

Consumers and startups point to 2017 growth

The shift by consumers to spending early at Christmas to tap ‘Black Friday’ discounts helped to drive the sharp rise in retail sales in November, a retailing industry group has said.

CSO figures showed underlying sales which exclude car sales rose 3.1% in the month and climbed 4.9% from November 2015.

When measured by value, underlying sales were up by a less dramatic 1.8% in the month and by 2.2% in the year.

Strong sales of electrical goods and cosmetics in the month appear to confirm that the ‘Black Friday’ shopping day was working to boost early Christmas shopping in November.

Ibec industry group Retail Ireland said shoppers were starting their festive spending earlier and the “encouraging” figures partly reflected the growing phenomenon of Black Friday discounting.

It said the CSO figures reflected some hefty discounting, with volume growth running “at over two-and-half times sales value growth across all major retail categories”.

Over the three months to the end of November, volume sales of furniture and lighting and electrical goods soared up to 11.5% from a year earlier, the CSO figures showed.

KBC Bank analysts said that capturing a true picture of the health of the consumer market remained elusive, as the “November data also hint that some domestic retailer responded aggressively to increased pressures posed by sterling weakness by cutting their prices”.

Nonetheless, David McNamara at Davy Stockbrokers said that consumer spending would likely be robust this year, and Dermot O’Leary at Goodbody Stockbrokers said the weakness of sterling against the euro should ensure that shop prices fall further in 2017.

The Government is relying on a recovery in consumer spending to help it reach its fiscal targets this year.

Figures also published yesterday showed the services side of the economy strengthened at year-end, according to the Investec survey of purchasing managers.

Its manufacturing survey earlier this week showed output from factories appeared to have recovered from a slowdown in the immediate aftermath of the UK’s Brexit vote in June.

Meanwhile, new figures from business and credit risk analyst Vision-net showed that 20,997 new companies were registered in 2016, representing a yearly increase of 8%.

It marks the first time in nearly 20 years that the number of new company startups has surpassed 20,000 in one year.

That showed Ireland had entered “a completely new post-austerity economic cycle powered by strong growth”, said Vision-net managing director Christine Cullen.

“Record-breaking company startup numbers, the lowest number of insolvencies since the onset of recession and consistent growth in sectors devastated by the crash like finance and construction are all indicators of this,” she said.

Professional services was the most popular area for startups in 2016, but finance registrations were ahead by 44% on 2015 levels, and 14% more new construction firms were established.

For the first time since 2008, fewer than 1,000 insolvency cases were recorded.

Ms Cullen warned, however, that regional imbalance still exists, with Dublin accounting for over 45% of company formations last year.

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