Consumer nerve holding up

Danske Bank chief economist Angela McGowan says consumers are looking forward to 2013 with greater confidence than 2012''''Photo: Kelvin Boyes/Press Eye
Danske Bank chief economist Angela McGowan says consumers are looking forward to 2013 with greater confidence than 2012''''Photo: Kelvin Boyes/Press Eye

LOCAL consumers are feeling more significantly more optimistic than at the same time last year a survey from Danske bank has claimed.

The bank’s Consumer Confidence Index shows that despite falling back marginally in December, people are anticipating a brighter 2013.

Danske Bank’s survey of Consumer Confidence in the local economy looks at the financial position of local households and their expectations for the year ahead. The latest report shows that the overall confidence index fell to 110 in December 2012, down from 111 in the previous quarter.

“The latest confidence survey found that there was a significant fall in how consumers perceived their current financial position compared to 12 months ago,” said the bank’s chief economist Angela McGowan.

“However, this decline was offset by some marginal gains in other aspects of the survey, including spending expectations and job security.”

The survey saw a rise in the proportion of people who felt that they were worse off relative to last year (an increase from 39% to 43%).

In particular, consumers in the 50-64 age bracket were the least confident when it came to this aspect of the survey, with 51 per cent of this age group reporting that they were worse off relative to one year ago.

Commenting on the overall confidence levels in 2012, Ms McGowan noted: “The economic position of households improved only very marginally during 2012. The Office for National Statistics has shown that in the first three quarters of last year, real disposable household income only increased by approximately £60.

“However, this was the average increase and there are also households that have not experienced any increase in real income. Those households with savings for example, generally feel worse-off when interest rates are low. And the spending power of retirement pension pots has diminished in the past few years. It’s not surprising that this age group, which includes a significant proportion of retirees, is more downbeat about their current financial position relative to last year.”

In terms of expectations for future finances, the overall index remained the same. However, there was a degree of divergence amongst the various age groups, with 16-24 years olds displaying most optimism while the 50-64 cohort were once again the least confident.

Confidence around job security saw a marginal improvement in the last quarter of 2012, largely driven by a fall in respondents (from 14 to 10%) who believe that their job security will deteriorate. Encouragingly, around 74 per cent of respondents believe that their job security will remain the same in 2013.

Spending expectations also saw a small improvement, as the proportion of respondents reporting that they would cut back on their spending fell from 37 to 34 per cent.

“Although the spending expectations aspect of the survey does not suggest a significant improvement in retail sales this year, it does suggest that confidence around spending is slowly moving in the right direction,” added Ms McGowan.