MII Welcomes Consumer Confidence Boost
Consumers are increasingly confident, which is fuelling a sustained improvement in overall spending, according to a new analysis.
The latest study to record an upward trend in confidence levels is the consumer market monitor for Q2 2014, launched by the Marketing Institute of Ireland and UCD's Smurfit business school.
The monitor, which tracks key indicators of confidence and activity in the Irish consumer market, calculates that consumer confidence now stands at +8.4, an increase of over 19 points when compared with second-quarter results from 2013.
Data is drawn from the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources to calculate the index.
Key findings from the latest consumer market monitor show the spike in consumer confidence, which, despite its growth on Q2 2013, has actually levelled off this year (+10 was recorded in the first quarter of 2014). The publication tracks this increased consumer confidence through improvements in car and property sales in 2014.
The property market in particular is showing notable improvements, with house sales in the first quarter of 2014 up by 28% and second-quarter sales also on a similar momentum.
The consumer confidence report also cites Central Bank forecasts of increased consumer spending (up 1.1% in 2014 and 1.3% in 2015) as evidence of resurgence.
“[The forecasts] may well prove pessimistic, however, as recent trends suggest continuing improvement in employment and considerable buoyancy in consumer confidence and spending. It may well be these estimates are actually exceeded; IBEC are forecasting growth of 1.9% in consumer spending this year and 2.9% in 2015,” it reports.
Retail sales trends have been a little less buoyant, with volumes increasing by 0.8% last year. The retail sales volume index at the start of 2014 was at 2005 levels, according to the report, however, retail sales volumes were up 4% year on year through Q2 2014.
Mary Lambkin, a marketing professor in UCD Smurfit school and one of the report's authors, points out that consumer spending accounts for over 60% of GNP in Ireland.
“Disposable incomes are still under pressure but increasing confidence coupled with greater availability of credit is at last leading to significant growth in many categories of goods and services,” she says.
Tom Trainor, chief executive of the Marketing Institute of Ireland, argues that better consumer confidence marks an important psychological milestone – i.e. people are feeling more comfortable spending again.
“This will hopefully lead to a virtuous cycle of spending as businesses feel more confident to expand or hire more staff, which in turn could result in another boost in consumer spending.”
Trainor adds: “While there are a number of serious hurdles to overcome, such as the impending budget, the signs are positive, representing a great opportunity for the Irish marketing profession to capitalise on.”
The full consumer market monitor can be accessed here. (August 2014)