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Spending falls as Northern Ireland shoppers less confident over finances

By Yvette Shapiro

Published 29/01/2016

Job losses in manufacturing and uncertainty over the global economy have combined to hit consumer spending in recent months, research said today.

A survey by Danske Bank revealed shoppers felt less confident about their finances in the last quarter of 2015 - dipping from an eight-year high in the previous three months.

The bank's chief economist Angela McGowan said: "It is possible that the highly publicised manufacturing job losses that Northern Ireland suffered during the fourth quarter of last year may have influenced the latest fall and raised doubts around the jobs market.

"In addition, we have to add into the mix that the global economic picture deteriorated slightly in quarter four, and this may also have raised uncertainty."

The survey also showed a rise in the number of people who expect to see a decline in their financial situation, up from 12% to 15%. Overall, 65% believed their finances would remain stable.

The bank says young people, in particular, were less positive about their money prospects.

Ms McGowan added: "It is a little surprising that with inflation on the floor and oil prices dropping to historical lows, people are not more upbeat about their level of disposable income in the year ahead.

"However, earnings data suggest that employers may be using the low level of inflation to negotiate tighter wage deals, and if this turns out to be the case in the months ahead, then households will understandably be concerned about their ability to make financial progress."

Confidence levels fell across all regions in Northern Ireland with the exception of Belfast city, which remained the most confident area of the country and also saw a small rise in its overall index.

The north-west was the second most confident area, followed by Greater Belfast. The lowest confidence levels were observed in the south and north regions.

The Danske survey of 1,000 people chimed with recent national reports on retail sales.

Last week's data from the Office for National Statistics revealed that spending in UK shops dropped in December as mild weather and deep discounting dented takings for retailers over the key Christmas period.

Official figures showed that sales values fell at their fastest pace for more than six years - down 1% compared with the same time in 2014.

And the latest monthly survey from the CBI showed that British shop sales lost pace slightly in the first half of January, and that retailers expected their weakest performance since 2013 in the three months ahead.

"Retailers have had a steady start to the year through the January sales period," said the CBI's director of economics, Rain Newton-Smith.

"However with competition remaining fierce and persistent price deflation in the sector, it is not surprising that the outlook for retailers in February looks subdued."

Danske Bank's Angela McGowan added: "Retailers have had a strong 2015 in terms of quantities sold, and in a number of ways 2016 should, in theory, also be a fairly healthy year for this sector given the rising employment levels and the boost to incomes from low energy costs.

"However, we also need to keep in mind that increased global uncertainty and volatile stock markets might weigh on consumer confidence in the months ahead."

Belfast Telegraph

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