A surge in spending on houses, cars and household goods coupled with growing employment has seen consumer sentiment hit levels not seen since the height of the boom, a survey has found.
Consumer spending is contributing to economic growth for the first time since 2008, the latest Consumer Market Monitor (CMM) from the UCD Michael Smurfit Graduate Business School and the Marketing Institute has also found.
According to the report, retail sales climbed by 3.7 per cent in 2014 and by 5.7 per cent for the first half of 2015. Spending on services meanwhile climbed 4.1 per cent in 2014, and a further 9.3 per cent for the first quarter of 2015.
Using data from multiple official sources, the report highlights the 40,000 houses sold in 2014 and 21,300 in the first half of 2015.
The monitor says things which have contributed to this positive trend include steady increases in employment. There were 93,000 jobs added from the low point in 2012 to the first quarter of this year, a 5 per cent increase.
Consumer confidence has boasted a positive trend from 2013, reaching a record level in the last quarter of last 2014. This has been feeding through into consumer spending.
Sales of new cars experienced a major turnaround last year with 92,361 units sold, a 30 per cent 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 per cent year-on-year.
Retail sales are also improving. Sales volume rose by 3.7 per cent in 2014 while the value of the sales increased by 1.6 per cent indicating a significant upturn in activity. This upward trend has continued into 2015, with sales volume up by 6.6 per cent in the second quarter of this year compared with the same period last year..
Sales of household goods has been particularly strong, with electrical goods up 9.5 per cent in volume in the second three months of this year. Sales of hardware, paints and glass climbed 6.2 per cent while furniture and lighting sales were up 5.9 per cent reflecting the increasing number of property transactions.
Sales of services have also been strengthening, up 4.1 per cent for the year 2014, and up by a further 9.3 per cent for the first quarter of 2015, year-on-year.
The monitor shows household disposable income climbing by 3 per cent in 2013 - the first increase since 2008. Disposable income rose by a further 3 per cent last year and is forecast to increase again this year and next, in response to continuing improvements in employment numbers, and other factors such as falling oil prices and possible tax reductions.
Household spending closely mirrors income, and recorded growth last year for the first time since 2008. Personal consumption expenditure was up 2 per cent for the year. Personal consumer spending is growing at an increasing rate this year, up 3.8 per cent in the first quarter
Personal consumer spending last year was still €10 billion less than at the peak year of 2007. However, consumer expenditure is expected to continue to grow due to improving labour market conditions and stronger consumer confidence.
"Consumer spending accounts for over 60 per cent of GNP in Ireland and is a critical factor in driving recovery in the economy," said Mary Lambkin, Professor of Marketing, UCD Smurfit School, and one of the authors of the Monitor.
“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,” Ms Lambkin said.
"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," said the chief executive, of the Marketing Institute Tom Trainor. " 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."
