Consumer confidence continues to surge
Consumer confidence in Northern Ireland has continued to surge upwards in the first quarter of 2014, according to the latest Danske Bank report.
Danske Bank’s Consumer Confidence Index looks at the financial position of local households and their expectations for the year ahead. The latest report shows that the index rose to 132 in the first quarter of this year, rising by 9 points over the quarter and 28 points since the same period last year. All aspects of the survey are now sitting at their highest point since the survey began in September 2008.
Commenting on the latest movement in the Index, Danske Bank’s Chief Economist Angela McGowan said: “Overall the latest confidence survey is very encouraging. Consumers appear to be more willing to spend and are feeling much more confident about their financial situation in the year ahead. Of course, confidence levels vary and we must be cognisant of the fact that older and retired people as well as the unemployed have still further to go before their confidence levels around personal finances improve”.
“The overall strong and continued improvement in local consumer confidence reflects the much improved economic environment and augers very well for the year ahead. Falling inflation, a stabilised housing market and an improved outlook for jobs are all clearly having an impact upon consumer sentiment in Northern Ireland.”
Expectations for finances in the next 12 months
While the majority of respondents (60%) believed that their personal finances would stay the same over the next 12 months, nearly one in five respondents (18%) expected that their finances would in fact improve. Most of the progress made in this part of the survey was driven by a decline in negative responses. The number of households believing that their finances would deteriorate in the next year fell back to 18 per cent -compared to 23 per cent in the last quarter and 34 percent one year ago.
Ms McGowan said: “Working households are quite rightly anticipating that their financial position should improve in the year ahead. As inflation falls, the pressure on household incomes is easing. The labour market is also getting stronger and the level of personal allowance on which employees pay no income tax will rise to £10,000 this month and £10,500 next year”.
Retailers will be pleased to hear that spending expectations have continued to improve. Just over one in five people (21 per cent) are planning on spending more on ‘big-ticket’ items in the year ahead (up from 17 per cent in the previous quarter). This aspect of the confidence survey also benefited from a declining number of households who intend to curb their spending. In March last year a full 41 per cent of households planned to curb their spending – this fallen back to 26 per cent.
Financial position now relative to last year
The majority of households (55 per cent) believed their financial position did not change over the year. However, 16 per cent of those surveyed said their financial position had actually improved over the last 12 months. There was also a significant fall in the number of negative responses with the percentage who believed that their finances had deteriorated falling to 28 per cent in the latest survey (from 33 per cent in the previous quarter and 45 per cent one year ago).
Approximately 79% of local households believe that their job security will either be unchanged or will actually improve over the next 12 months. Over the latest quarter the number of households that believed their job security would deteriorate in the months ahead fell from 14 per cent to 9 per cent.
Around 62 per cent of households in Northern Ireland expect to make no change to their savings behavior in the year ahead. However, 11 per cent intend to save more and 23 per cent intend to save less.
Trends in the survey
Confidence levels were highest in the North East area of Northern Ireland which includes Ballymena, Antrim, Carrickfergus, Larne and Ballymoney. Men in Northern Ireland are found to be marginally more optimistic than females, particularly when it comes to how they feel about their financial position relative to last year. Full-time workers are consistently found to be more much more optimistic that part-timers; while retired and unemployed people were the least confident groups. Single people were found to be more confident than married people in all aspects of the survey with the exception of ‘spending expectations’. The Danske Bank survey finds time after time that young people between the ages of 16 and 34 are significantly more confident than those in middle aged and retired households.
Attitudes to the UK Budget
In the latest survey local consumers were also asked which measure they would most have like to see in the UK Budget last month. The majority of households in Northern Ireland (40 per cent) would have liked to have seen a reduction in the current VAT level. Almost the same number again (37 per cent) would have preferred to see a reduction in personal income tax (and were most probably content with the Chancellor’s decision to increase in Personal Allowance to £10,500).
A mere 11 per cent of local households were rooting for the Chancellor to take measures to tackle the public finances and a further 11 percent responded that they ‘did not know’ what measures they would most like to see.