Irish consumer confidence increased 19 points to +8.4 in the second quarter of the year compared to the same period in 2013, according to the UCD Michael Smurfit Graduate Business School Consumer Market Monitor.
This was shown to be significantly higher than our neighbouring countries. Consumer confidence also rose in the first quarter of the year to a record high of +10.
Mary Lambkin, Professor of Marketing, UCD Smurfit School, and one of the authors of the report said that improving confidence has started to feed through into consumer spending. She said, "Consumer spending accounts for over 60% of GNP in Ireland and is a critical factor in driving any recovery of the economy. Consumer spending is affected by the combined influences of how much money people have available to spend coupled with their confidence in spending it."
Lambkin said that disposable incomes are still under pressure but increasing confidence coupled with greater availability of credit is inevitably leading to significant growth in many categories of goods and services.
However, the Central Bank is forecasting that there will only be a modest increase in consumer spending this year, of 1.1% for 2014 and 1.3% for 2015. The Market Monitor says that while this may seem pessimistic, it may well be that these estimates are actually exceeded.
The report showed that retail sales are showing more buoyancy this year, as sales volumes increased by 2.8% in Q1, year-on-year and accelerated with volume sales up 4% year-on-year.
Tom Trainor, chief executive, The Marketing Institute said that the positive shift in consumer confidence points to a potential turnaround in the Irish economy and marks an important psychological milestone as people are feeling more comfortable to spend again.
He said: "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. 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."
