Consumer confidence on the up - Danske

Danske economist Conor Lambe
Danske economist Conor Lambe

Consumer confidence in Northern Ireland rose sharply in the first quarter of 2017 as consumers got some more clarity around the Brexit process, according to Danske Bank research.

The bank’s Northern Ireland Consumer Confidence Index increased from 132 in 2016 Q4 to 141 in 2017 Q1. The index was four points higher compared with the first quarter of 2016.

“Despite the fact that inflation is rising and exerting some pressure on households’ spending power, consumer confidence surprised on the upside in the first quarter of 2017,” said Danske Bank economist Conor Lambe.

“Our Index shows that consumer confidence in Northern Ireland is at its highest level since the third quarter of 2015.

“This strong bounce back could, in part, be due to consumers now having more clarity about the UK Government’s planned approach to the Brexit negotiations, and that the UK and EU have both shown willingness to find a solution to the border issue.

“The rise could also be interpreted as a sign that, while economic growth is expected to slow, consumers now feel confident that the short-term impact of the EU referendum on the economy is not going to be as severe as first thought.”

Household expectations of how people felt their financial position will change over the next 12 months improved by 13 points over the quarter.

“The sharp rise on this particular measure appears surprising given that rising inflation will have an adverse impact on real wage growth as we move through this year,” said Mr Lambe.

“However, when considered alongside the large fall observed on this part of the index at the end of 2016, the latest data really just shows that we are now back where we were in the second and third quarters of last year.”