Consumers are more buoyant now than they were even in the so-called ‘boom’ years of 2006 and 2007, claims a new survey.
According to the latest Consumer Market Monitor, jointly published by the UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland, consumer spending last year contributed to economic growth for the first time since the financial crash of 2008. The survey found consumer confidence levels, rose 12 points in the final quarter of 2014, higher than levels seen in the pre-crisis years.
It also forecasts that the volume of consumption, or retail sales, will grow by 1.6% this year.
“We have been waiting for the green shoots of economic recovery for a long time in Ireland, and especially in the consumer economy, which has been particularly badly damaged in the recession,” said Marketing Institute chief Tom Trainor.
“It is very heartening to see definite evidence that this sector is now recovering and this positive momentum will help to strengthen many businesses and allow them to grow and expand employment.”
CSO data published last week showed an 8.8% annualised rise in retail sales for January, but some commentators warned against complacency, saying discounting either side of Christmas played a big part and that many retailers are still facing huge challenges in order to recover.
“Overall, retail sales have turned a corner and are back on a growth path, although off a very low base,” said Mary Lambkin, professor of marketing at the UCD Smurfit school. “Consumer spending accounts for over 60% of GNP in Ireland and is a critical factor in driving recovery in the economy.”
The latest monitor survey also shows more consumers expect their household finances to improve, rather than worsen, over the year ahead, for the first time since 2007.
“Consumer spending is affected by the combined influences of how much money people have available to spend, coupled with their confidence in spending it,” said Ms Lambkin. “Disposable incomes are, at last, beginning to show modest growth as a result of jobs growth and this, coupled with greater availability of credit is leading to accelerated spending on many categories of goods and services.”
Merrion Stockbrokers’ chief economist Alan McQuaid said last week that he expects retail sales to rise, in volume terms, between 6% to 8% this year, but Retail Excellence Ireland said the fact that sales value is not matching volume growth is proof that many parts of the country continue to struggle.
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