Posted on Friday 20 April 2012 by Ulster Business
Angela McGowan, Chief Economist at Northern Bank
The bank’s survey of Consumer Confidence in Northern Ireland, which looks at the financial position of local households and their expectations for the year ahead, showed that the overall confidence index rose for the second quarter in a row to 100 in the first three months of this year, from 98 in the last quarter of 2011.
The survey, which was carried out in March 2012, brought Northern Ireland’s local sentiment index to a level not seen for nine months, although Northern Bank Chief Economist Angela McGowan was measured in her analysis of what this implied.
“Confidence levels still remain relatively subdued however the index continues to move in the right direction. Moves from the European Central Bank (ECB) to stabilise the situation in Europe at the end of last year brought a degree of stability to the global recovery in Quarter 1 and consumers are always happier when macro economic conditions are stable,” she said.
The latest data for Northern Ireland shows a small improvement in all aspects of the index with the exception of ‘Job Expectations’, which fell back to the lowest level since records began in 2008.
The survey showed a small improvement in how households viewed their financial position relative to 12 months ago, but the strongest improvement came by way of consumers’ outlook for their household finances in the year ahead.
On this, Ms McGowan said: “The improvement in expectations for household income in the year ahead is probably a reflection of consumer expectations that inflation will fall back this year and this combined with an expansion in the basic rate tax payer’s personal allowance from April onwards should take some pressure off disposable incomes.”
There was also a very marginal improvement in consumers spending expectations, but overall spending levels remained relatively subdued, the economist added.
“Spending habits take time to improve, but hopefully a strong tourist offering and this small improvement in local sentiment levels will together give Northern Ireland’s retail sector a much needed boost,” she said.
The latest survey revealed that expectations for job security have fallen to their lowest levels since records began. In particular this aspect of the survey was driven by a five percentage point increase in the number of respondents who believed that their job security would deteriorate in the next 12 months. The proportion who anticipated worsening job security rose from 13 per cent in Q4 last year to 18 per cent in Quarter 1 this year.
The survey also revealed that once again young people aged 16-24 have the most optimistic outlook out of all age groups, which Ms McGowan described as ‘surprising’ given the relatively high levels of youth unemployment. Young people were also the most optimistic age group for all aspects of the survey.