Belfast Telegraph

Public confidence in economy slipped in first quarter

By Margaret Canning

Consumers were slightly less confident about their prospects over the second quarter of 2014 compared to the outset of the year, according to the Danske Bank consumer confidence index.

Confidence was higher among people in the southern part of the province – which includes Down and Armagh – and greater Belfast.

Men were more confident about their finances than women – and young people were more confident than the middle-aged and older people. But overall, confidence had slipped slightly compared to the first three months of the year, with the consumer confidence index at 128 compared to 132 the quarter before.

However, the bank said confidence was still 11 points higher than it had been in the same period a year earlier, and 16 points above its five-year average.

The bank's chief economist Angela McGowan said the long-running index could be expected to show slight ups and downs in confidence, even during economic recovery.

But she said the dip could reflect a feeling among some that the recovery was not putting money in their pockets.

"It may seem to people that the recovery has been in place for some time but that they are still not seeing any increase in their pay.

"There has also been a drop in expectations of spending so people are still feeling a squeeze on household incomes.

"This could be because of pressure from inflation – it is still coming down but it is higher than wage growth."

But she added: "The headline index is still sitting at the second highest level for nearly six years.

"The overall results of the survey suggest that households are confident that the recovery is under way, but they are still waiting for it to have an impact upon their own personal finances. By and large this has not happened because earnings growth has remained muted across all sectors".

Nearly 60% of people told the survey they thought their finances would stay the same over next 12 months, while 17% thought they might even improve. Around 18% thought they would get worse.

People were slightly gloomier than at the start of the year about how their present financial position compared to 12 months earlier. But compared to a full 12 months earlier, they were more optimistic.

Spending expectations were also down on the quarter before but were still higher than a year earlier – and even higher than the five-year average.

Ms McGowan said: "Although the economy has improved, consumers are signalling that they are still relatively cautious when it comes to spending."

Belfast Telegraph