Irish households are expected to spend €6.5 billion on holiday trips this year. The figure is up on the €6 billion spent on holidays last year, a figure last seen in 2007.
The latest Consumer Market Monitor (CMM), published by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School shows that overseas trips are up by 7.4% in 2019, signalling a potential rise in spending to €6.5 billion.
These figures reflect a larger working population with good incomes rather than reckless borrowing, according to Marketing Professor Mary Lambkin of UCD Michael Smurfit Graduate Business School, author of the report.
Commenting on the report findings, Tom Trainor, Chief Executive of the Marketing Institute of Ireland, said:
The continuing growth in employment and income are leading to improvements in household finances and consumer spending, which continues to grow despite weakened confidence due the uncertainty of the Brexit outcome.
- Household finances have been boosted by the increasing value of peoples’ homes, with household net worth per capita now standing at €158,000, up 70% from the low of 2012;
- The disposable income of Irish households rose by 6% in 2018 to a total of €110 billion, significantly overtaking the last peak of €101 million in 2007;
- Unlike during the Celtic Tiger, credit and borrowing are not major contributory factors in recent spending, with the ratio of debt/disposable income of Irish households down from a peak of 215% in 2012 to 124% this year;
- Savings deposits grew by €4 billion in 2018, with deposits for a house purchase estimated to be a major factor, with approximately 30% of renters or 10% of all Irish households saving for a deposit.
The Irish consumer economy is continuing to perform strongly and remains a key contributor to overall economic performance, accounting for 51% of GNP.
Personal consumer spending grew by 3.4% in 2018 to €105 billion, and this positive trend is continuing in 2019 with spending up by 2.9 % in the first quarter and indications that it has also grown strongly during the second quarter.
Consumer spending is forecast to grow by 2.6% for the full year 2019, to about €108 billion, and by a further 2.4% in 2020.
The key fundamentals are the continuing growth in employment and incomes, leading to significant improvements in household finances. There are now 2.3 million people at work, up 50,500 (2.3%) year-on-year, and up by 439,000 or 20% from the low in mid-2012.
Employment is expected to continue growing but at a moderating rate as the economy approaches full employment. The projected growth of 2.4% for 2019 and 1.7% in 2020 will add another 100,000 people to the workforce.
Earnings growth has played a more significant role in recent years as wages have been increasing by around 2.5% per annum since 2015 and wage growth is expected to reach 3.6% this year and 3.7% next year, as the labour market approaches capacity.
The combination of more people working and higher wages has led to substantial increases in the amount of disposable income circulating in the Irish economy.