Belfast Telegraph

Consumer confidence rise could be down to higher wages: Danske Bank

Impact: economist Conor Lambe
Impact: economist Conor Lambe
Margaret Canning

By Margaret Canning

Consumer confidence in Northern Ireland rose towards the end of 2018 despite evidence of a Brexit-linked downturn in the UK economy, according to a survey today.

Danske Bank's consumer confidence index reached 127 between October and December last year, up from 123.

The period covers the announcement of a Draft Withdrawal Agreement between the UK and EU, which had been welcomed by many business groups in Northern Ireland though later decisively rejected by MPs.

But confidence was still lower than it had been during the first half of the year, and for most of 2014 to 2017.

Danske Bank chief economist Conor Lambe said rising wage packets may be among the factors driving the rise in confidence. Last year, the median annual wage for full-time employees crossed the £27,000 threshold for the first time with the private sector median hitting £24,000.

Today's findings come after the Office for National Statistics (ONS) said GDP growth had fallen by 0.2% from October to December, compared to 0.6% for the previous quarter.

Ulster Bank's purchasing managers' index for January said firms here made their first staffing cuts in four years during January, as fears of a no-deal Brexit set in.

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Despite the increase in confidence among consumers, Danske Bank said people had revealed some concerns.

Mr Lambe said: "Almost 40% of people told us that political uncertainty and the continued absence of a Northern Ireland Executive had the largest negative impact on how they were feeling.

"In addition, 17% of respondents said developments during the Brexit negotiations in recent months negatively impacted them and a further 12% pointed to the UK government's longer-term Brexit objectives as the factor that had the largest negative impact on confidence levels." 

But he said rising wage packets could be the factor which was giving people a sunnier outlook.

"Almost a quarter of people highlighted rising wages as the factor that had the biggest positive impact on their confidence levels," he added.

"Consumers also pointed to low interest rates and increasing house prices as other factors impacting them positively."

Interest rates have been at 0.75% since August last year, when they were increased from 0.5%.

And 2018 saw Northern Ireland experience the highest level of house price increase in the UK at 5.8% to hit an average of £139,599, according to the Nationwide Building Society. The second highest rate of growth was 4%.

Belfast Telegraph

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