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Consumer confidence in Northern Ireland now highest since 2008

By Margaret Canning

Published 10/04/2015

Angela McGowan chief economist at Danske Bank said the 2% fall in new car sales in March was likely to be a signal of slight
Angela McGowan chief economist at Danske Bank said the 2% fall in new car sales in March was likely to be a signal of slight "volatility"

Low inflation and improvements in the job market have pushed consumer confidence in Northern Ireland to a seven-year high, according to Danske Bank.

Its consumer confidence index - which monitors the spending plans of households - experienced a strong rise at the start of the year, bringing it to its highest since 2008.

Factors influencing the index include historic falls in inflation to 0% in February - meaning that prices for basic goods had not increased over the previous 12 months.

Shop prices continued to fall at an unprecedented pace during the last month, according to the British Retail Consortium (BRC), with food prices falling by 0.9%.

But the growth in the index follows fresh statistics showing a fall in new car sales - usually viewed as a key barometer of consumer confidence - in Northern Ireland in March.

That fall followed at least 18 months of growth in car sales up to July 2014. But Danske Bank's chief economist Angela McGowan said the 2% fall in new car sales in March was likely to be a signal of slight "volatility".

"The overall trend is upwards so something like this is volatility in the index which is nothing to be concerned about," she said.

Ms McGowan said a number of improvements in the wider economy had supported household confidence levels.

"In the first instance, low inflation has helped to strengthen disposable incomes and rising house prices have also made home-owners feel wealthier," said Ms McGowan.

"The local labour market has also improved, with 1,454 new jobs announced during January to March this year and the number of unemployment claimants continuing to fall in the same period."

According to the latest labour force survey, the Northern Ireland unemployment rate was 6% during November to January - a fall of 1.5 percentage points over the year.

Danske said it found an improvement in all measures of the survey - but the biggest jump had been in spending expectations.

People were planning to spend more on so-called 'big ticket' items - in fact, nearly 30% were planning to fork out on significant purchases.

Unsurprisingly it was higher income families who had plans to spend the most. Just over a quarter of higher-income households were planning to spend more, compared with just 9% of lower-income families.

Most of the respondents said they felt their financial situation would be unchanged over the next year, while there was a fall of 3% to 14% in the numbers of those expecting their finances to get worse in the next year.

Belfast Telegraph

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