- Consumer spending falls again in the first half of 2012 and is expected to end the year down by 2.0%.
- Personal savings ratio continues to rise in 2012
- Total household credit declines 30% to €148b by March 2012.
- Credit card debt continues to decline in the first half of 2012, down -5.4% in June 2012, compared to June 2011.
- Consumer borrowing declines 19% from 2009 peak of €23 billion.
- Retail sales down 1% in Q2 2012.
Dublin, Tuesday, 14th August 2012: UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland have today launched their Consumer Market Monitor for Q2 2012. Data from the Monitor shows consumer spending is continuing the downward trend that it has been on for the last four years and is closely mirroring trends in disposable income. The Monitor tracks key indicators of confidence and activity in the Irish consumer market and is an indicator of the health of the overall economy, in view of the fact that the consumer market accounts for 63% of GNP.
Mary Lambkin, Professor of Marketing, UCD Smurfit School and one of the authors of the Monitor, said, “It is likely that Irish consumer confidence will remain well below historical averages against the backdrop of a persistently high unemployment rate and international economic instability. Consumer spending is down by 2.1% for the first half of this year, and it is expected to be down 2.0% for the year as a whole. However, the disposable income of households was up 3.6% in Q1 of 2012, compared with the same quarter of 2011. Higher wages and profits of the self-employed along with lower interest payments contributed to this. Consumer confidence has also picked up slightly in the first half of 2012 although it is still lower than the same period last year (-15 in June 2011).”
The Consumer Market Monitor relies on a model of consumer behaviour which sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influences consumer behaviour including spending, saving and borrowing. The Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources.
Tom Trainor, Chief Executive, The Marketing Institute said, “Consumer spending has experienced record-breaking falls since 2009 in line with dramatic drops in household income. There is no magic bullet for the Irish economy, however, with income and spending expected to stabilise this year and show modest growth thereafter, a path of sustainable growth lies ahead providing the international environment improves.”
Key findings from the Consumer Market Monitor for Q2 2012 include:
- Consumer Confidence has picked up slightly in the first half of 2012, rising to -20 in June 2012. However, this is still lower than the same period last year (-15 in June 2011). Irish consumer sentiment was on par with the UK for much of quarter two of 2012 (both at -20 for May and June).
- Consumer spending has declined in line with incomes, dropping by a record -10.9% in 2009, and continuing this downward trend in 2010 (-3.0%) and 2011 (-1.2%), to a level of €78.3 billion.
- Disposable income of households had been declining every quarter since 2008. However, disposable income was up 3.6% in Q1 of this year compared with the same quarter of 2011.
- Personal savings ratio continues to rise in 2012, estimated to be as high as 13% for the year as a whole.
- Credit card debt continues to decline in the first half of 2012, down -5.4% in June 2012, compared to June 2011.
- Personal consumption fell by a cumulative -6.9% in real terms over the four years since the peak in 2007.
- Retailing, which makes up about half of all consumer spending, is down by -1.7% in the second quarter, following a growth of 0.4% in the first quarter, and there does not seem to be any evidence of an uplift in this in Q3.
- Essential products including food and pharmaceuticals held up well in the second quarter.
- Other retail categories (fuel; clothing, footwear and textiles; books and stationery; bar sales) experienced substantial declines in Q2 year-on-year:
To download the full report visit http://www.mii.ie/cmm/
Sourced from The Marketing Institute of Ireland
