The Consumer Market Monitor is a service provided by The Marketing Institute of Ireland in collaboration with the UCD Smurfit Graduate Business School. It is designed to track key indicators of confidence and activity in the Irish consumer market as a resource for marketers and the wider business community.
The consumer economy is now recovering rapidly
Economic recovery is building rapidly in Ireland, with consumer spending now making a significant contribution to economic growth, for the first time since the start of the recession in 2008; one of the key findings of the latest Consumer Market Monitor (CMM), published today by the Marketing Institute and UCD Michael Smurfit Graduate Business School.
Retail sales were up 3.7% for 2014 and by 5.7% for the first half of 2015, in real terms. Services were up 4.1% for 2014, and up 9.3% for the first quarter of 2015. 40,000 houses sold in 2014, up 38%, and 21,300 in the first half of 2015, up 47%.
A number of things are contributing to this positive trend – most notably regular increases in employment. There were 93,000 jobs added from the low point in 2012 to the first quarter of this year, a 5% increase in the total number of people employed.
Mary Lambkin, Professor of Marketing, UCD Smurfit School, and one of the authors of the Monitor, said “Consumer spending accounts for over 60% of GNP in Ireland and is a critical factor in driving recovery in the economy.”
Consumer confidence has boasted a positive trend from 2013, reaching a record level in Q4 2014, and this has been feeding through into consumer spending. Sales of new cars experienced a major turnaround in 2014, with 92,361 units sold, a 30% increase on 2013. This buoyancy is continuing this year, with 78,660 new private cars licensed in the first half of the year, an increase of 26% year-on-year.
Lambkin continues “Disposable incomes are at last beginning to show modest growth as a result of jobs growth and this, coupled with greater availability of credit, is leading to accelerated spending on many categories of goods and services.”
Retail sales are also improving; sales volume rose by 3.7% in 2014 while value increased by 1.6% indicating a significant upturn in activity. This upward trend has continued into 2015, with sales volume up by 6.6% in Q2, year-on-year, following 4.8% in Q1. Value was up 3.4%, also an improvement of the increase of 1% in Q1.
Commenting on the findings Tom Trainor, Chief Executive, of The Marketing Institute, explains “We have been waiting for economic recovery for a long time in Ireland and especially in the consumer economy which has been particularly badly damaged in the recession. It is very heartening to see definite evidence that this sector is now recovering and this positive momentum will help to strengthen many businesses and allow them to grow and expand employment.”
Sales of household goods were particularly strong, with electrical goods up 9.5% in volume in Q2, hardware, paints and glass up 6.2%, and furniture and lighting up 5.9%; reflecting the increasing number of property transactions. Sales of services have also been strengthening, up 4.1% for the year 2014, and up by a further 9.3% for the first quarter of 2015, year-on-year.
There is also to some regional variation in the rate of recovery, with the greater Dublin area recovering more quickly than the rest of the country. The other regions are catching up, however, with the recovery gradually spreading to all areas.