Success of vaccine rollout boosted NI consumer confidence in first quarter

Consumer confidence in Northern Ireland increased in the first quarter of 2021, supported by the rollout of the coronavirus vaccine programme, according to analysis published today by Danske Bank.

The Danske Bank Northern Ireland Consumer Confidence Index increased to a reading of 137 in Q1 2021, up from 124 in the fourth quarter of last year, and above the index level of 119 posted in the first quarter of 2020. The survey was carried out in March 2021.

In the survey, local people reported feeling more confident about their current finances, future finances, job security and expected spending on expensive items.

When asked what had the largest positive impact on their confidence levels, 49 per cent of people highlighted the rollout of the coronavirus vaccine programme.

For 15 per cent of people, the restrictions in place to limit the spread of coronavirus were viewed positively and 5 per cent said that government measures aimed at protecting jobs and incomes, such as the Furlough scheme, had a positive impact on sentiment.

On the downside, 20 per cent of people surveyed said the restrictions in place because of the pandemic had a negative effect on how they were feeling.

Away from the pandemic the biggest issues highlighted as negatively impacting confidence levels were the new post-Brexit trading arrangements in Northern Ireland (33 per cent), the impact of higher prices on household finances (12 per cent) and the performance of the local economy (10 per cent).

Commenting on the headline figures, Danske Bank Chief Economist Conor Lambe said: “This latest rise in consumer confidence in Northern Ireland is a welcome development and our survey showed that the continued rollout of the coronavirus vaccine programme was a key driver behind the rise in sentiment in the first quarter of the year.

“Looking ahead, I would expect the gradual easing of the coronavirus restrictions and the reopening of the consumer-focused sectors of the economy to lead to a rise in household spending over the coming months and contribute to the local economy beginning to grow again from the second quarter of the year onwards.”

Of the people surveyed by Danske Bank, 30 per cent felt their financial position had improved over the previous 12 months, but 28 per cent of people said their finances had deteriorated. Asked about their future finances, 26 per cent of people surveyed expected their financial position to improve over the next year, compared with 21 per cent who expected their finances to worsen.

On job security, 15 per cent of people surveyed said they expected their job security to worsen versus 10 per cent who expected to become more secure in their job. This was relatively stronger than in 2020 Q4. And in terms of spending, 31 per cent of consumers said they expected to spend more on high value items over the next year, compared with 36 per cent who expected to spend less – a stronger position than in the survey from the previous quarter.

On the outlook for consumer spending, Conor added: “During the last year, many of the places in which people typically spend money including shops and restaurants have had to close at certain times. People have also not had the same ability to take foreign holidays as they did prior to the pandemic and have spent much more of their time at home. These factors have combined to cause a sharp rise in household savings. It is unlikely that people will spend all this money as the economy reopens, but it will provide some support to household spending.

“While we expect a rise in overall consumer spending as the economy reopens, it’s important to note that some people are likely to behave cautiously with regards to their spending levels. There is still considerable uncertainty around the future path of the pandemic, unemployment is projected to rise this year and people who have been furloughed may have seen their income squeezed, so some consumers may be less willing to spend than others.”

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