consumer Archives - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Consumer sentiment improves for second month after Covid-19 collapse

Consumer sentiment improved in June for the second month in a row, but remains well below levels recorded before the onset of the COVID-19 crisis, a survey showed today. 

The KBC Bank consumer sentiment index climbed to 61.6 in June from 52.3 in May, but remains some distance from February’s pre-pandemic reading of 85.2. 

In April the index had dropped to 42.6 in the sharpest month-on-month decline in the survey’s 24-year history. 

The recovery in consumer sentiment mirrors gains in similar indicators for the UK, the US and the euro zone, and suggests the easing of lockdown measures is making consumers feel slightly less negative about the economic outlook, the index compilers said. 

“There was a significant improvement in expectations for household finances a year from now but, again, this needs to be seen in context,” said Austin Hughes, chief economist at KBC Bank Ireland. 

“Only one in 20 consumers envisages better financial circumstances through the next 12 months whereas one in three expects a deterioration,” the economist added. 

Ireland in March shut pubs, restaurants and non-essential retail outlets and ordered people to stay at home.

But the Government has announced plans to accelerate the reopening of its economy as the rate of Covid-19 infections falls.

Austin Hughes said that fading fears should support stronger spending.

But he but warned that “the cautious tone of responses to questions on personal finances suggests a still fearful and, in many instances, financially damaged Irish consumer”.

“To set sentiment and spending on a solid rather than a shrunken trajectory, we think the survey emphasises the need for an ambitious and early fiscal stimulus to limit the lasting damage of Covid-19 to the Irish economy,” the economist added.

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35% of consumers shop online on a weekly basis – BPFI

31% of consumers are more likely to continue shopping online for clothes, toys and electronic goods after Covid-19 restrictions have been lifted, a survey conducted by Banking & Payment Federation Ireland shows.

But one in five of those consumers who have shopped online for groceries, hardware and DIY or newspapers and magazines are less likely to shop online for these products once the restrictions are eased. 

Today’s BPFI survey found that Irish adults shop online 44 times a year with over 35% claiming to shop online on at least a weekly basis. 

It also reveals that men shop online more frequently than women – 50 times a year compared to 38 times a year.

Millennials – people aged between 25 and 37 – shop online more than any other age group.

Meanwhile, both men and women say they are more likely to continue to shop online for clothes, while a higher proportion of men than women are more likely to shop online for games and films, books and music post restrictions.

Further analysis from the survey shows that 69% of adults here shop online at least once a month, in line with salary payments.

But the proportion of those shopping online drops as consumers get older and varies significantly by region – with an online shopping rate of 76% in Dublin compared to 64% in Connacht/Ulster.

BPFI’s chief executive Brian Hayes said that online shopping has seen rapid growth in recent years, with almost €5.8 billion in e-commerce sales on credit and debit cards in the first quarter of this year alone.

“The scale of this is further demonstrated when you consider that e-commerce accounted for 41.8% of card spend in that quarter, up from 31.3% only five years earlier,” Mr Hayes said. 

“Traditional ways of purchasing are changing rapidly, and our findings today emphasize that the shift to online shopping will be further fuelled by the current pandemic which will have a lasting impact in terms of reshaping consumers shopping habits and preferences,” he added.

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Business and consumer sentiment sink in April

A new survey shows that with the country more or less in full lockdown, job losses soaring and incomes under pressure, consumer and business confidence both sank in April. 

The Bank of Ireland Economic Pulse came in at 34.3 in April, the lowest reading in its history. 

The index, which combines the results of the Consumer and Business Pulses, was down 36.1 on last month and 57 lower than a year ago.

It reveals that three in five firms expect a further decline in business activity in the coming three months and just over a quarter anticipate having to lay off staff. 

Three in five households also indicated that they are holding out on spending because they are not certain which way economic policy is going to go.

Expectations for house price increases took a battering this month, with buying and especially selling sentiment also softening, Bank of Ireland said today.

Dr Loretta O’Sullivan, Group Chief Economist for Bank of Ireland, said this month’s survey findings are “grim” in the extreme. 

She said that the Economic Pulse reading is down a whopping 36 points, more than double last month’s drop. 

“With the country more or less in full lockdown, job losses soaring and incomes under pressure, consumer and business confidence both tanked in April,” Dr O’Sullivan said. 

“The Covid-19 shock is unprecedented and has resulted in a sudden turnaround in the economy’s fortunes.

“Given this and the huge uncertainty about the path of the virus and the depth and duration of the recession, it is no wonder that households and firms are very uneasy,” she added.

Bank of Ireland said today that its Business Pulse posted a historic low in April 2020, coming in at 29.6. This was down 38.8 on March and 63.7 lower than a year ago. 

The readings were weak across the board, with seven in ten firms reporting lower business activity in the recent trading period – led by services and retail. 

Bank of Ireland said the Covid-19 outbreak and the policy actions being taken at home and overseas to suppress the virus are affecting businesses through a number of channels – demand, supply chains, operations – and mostly negatively, though around three in ten are seeing some new opportunities.

The survey also showed that firms are downbeat about business activity and hiring, while one in five expects to cut wages in the coming year.

Today’s survey shows that the Consumer Pulse stood at 53.2 in April 2020, down 25.3 on last month and 30.3 on a year ago. 

Households’ assessment of the economy and their own financial prospects moved deep into the red this month, taking the headline index to an all-time low. 

Bank of Ireland noted that with the pandemic very much to the fore, just 13% considered it a good time to purchase big ticket items like furniture and electrical goods, down from 31% last month. 

Meanwhile, the Housing Pulse came in at 25 in April, a fall from last month’s reading of 52.4 and a new low for the series. 

Bank of Ireland said that expectations for house price gains over the coming year fell sharply this month, and for the first time since sentiment started to be tracked in January 2016, more households now expect prices to decline (55%) than go up (one in seven). 

“The Covid-19 outbreak has imparted a significant shock to the economy and with the government imposing a temporary rent freeze and ban on evictions, households’ expectations for future rent increases also headed into negative territory,” Bank of Ireland said. 

Today’s survey shows that 25% of consumers think it is a good time to sell a house, a big slump from the 61% at the start of the year. 

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Consumer sentiment suffers largest ever monthly drop

Consumer sentiment suffered its largest monthly drop on record in April, a survey showed today, demonstrating the scale and speed of the economic collapse unleashed by the coronavirus pandemic. 

Restaurants, bars and non-essential retail outlets have been closed in stay-at-home restrictions put in place on March 29. 

These restrictions are due to run until at least May 5 and the closures, as well as the closing down of construction sites, have already more than trebled the unemployment rate to 16.5%. 

KBC Bank Ireland’s consumer sentiment index nosedived to 42.6 from 77.3 in the previous survey conducted from March 3 to 10, before the gradual shutdown of the country began. 

It was the sharpest month-on-month decline in the survey’s 24-year history. 

It was also the second survey this month to show a record monthly fall after a collapse in activity reported by the services sector. 

The sentiment reading was slightly above the series’ lowest mark of 39.6 recorded in July 2008 when Ireland was among the countries hardest hit by the global financial crisis that pushed it into a three-year international bailout two years later. 

The scale of the drop this time around suggested the capacity of consumer spending to move back to a positive path “may depend critically on the scale, scope and speed of policy actions to re-start economic activity”, Austin Hughes, chief economist at KBC Ireland, said. 

“Expectations are still slightly above the low point of the previous crisis, presumably reflecting a judgment that the current crisis is finite in nature,” Mr Hughes said. 

“The details of the sentiment survey underline the scale of difficulties now being felt. Only one in 20 see their financial circumstances on an improving trend at present compared to one in five at the start of the year,” the economist added.

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Euro zone sentiment in record plunge as coronavirus strikes

Euro zone sentiment suffered its steepest ever monthly decline in March as the coronavirus led to declining confidence among consumers and all sectors of the economy.

In many cases the declines were evident even before crippling lockdowns were imposed. 

Economic sentiment in the 19 countries sharing the euro fell to 94.5 points in March from 103.4 in February, sharply breaking an upward trend in place from November, European Commission survey data showed today. 

The decline was the steepest monthly drop since records began in 1985. 

The overall figure, the lowest since September 2013, was slightly above the average 93 average forecast in a Reuters poll of economists. 

However, the Commission said that its data might be less accurate and comparable than usual because its fieldwork effectively stalled due to containment measures designed to stem the spread of the virus. 

Survey responses were collected between Feb 26 and March 23, but in practice the vast majority were from before national measures were enacted, such as the closure of schools, non-food shops, restaurants, cafes and sports facilities. 

For Germany and Italy, between 71 and 85% of responses were collected before significant containment measures. For France, it was more than 95%. 

Dramatic falls in expectations concerning future production and demand and the general economic situation were behind the record slump. Future employment expectations also worsened. 

Selling prices expectations fell markedly in all business sectors, led by services and retail, although consumer price expectations increased. 

Among the larger euro area economies, sentiment fell sharpest in Italy, the European country worst hit by the health crisis, and in Germany, the zone’s largest economy. 

In Britain, which has now left the EU, the decline was less marked, by just 3.5 points to 92. 

The average levels for all figures since 2000 is 100.

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Consumer sentiment remains subdued in February

Consumer sentiment remained subdued in February as concerns over household finances largely cancelled out optimism around the economy in general, a new survey shows today.

Ireland has remained the European Union’s fastest growing economy during three years of Brexit talks.

But today’s survey shows that many consumers are not seeing an improvement to their financial circumstances from the buoyant economy. 

The KBC Bank Ireland consumer sentiment index was 85.2 in February, little changed from January’s 85.5.

In October, when it seemed that the European Union and Britain could fail to reach agreement on the terms of Britain’s withdrawal from the trading bloc, the index fell to a seven-year low of 69.5. 

The index hit a 17-year high of 110.4 in January 2018 before consumers really began to be spooked by the possibility of a disruptive Brexit.

A version of this is still possible at the end year if a favourable trade deal cannot be reached. 

The survey found that average household incomes have increased by 2.4% a year during the recovery years, but GDP has grown by an average of 10.8%. 

Meanwhile around 80% of Irish consumers do not think that the continuing growth in the economy will be of any benefit to them over the next year.

“Brexit concerns likely explained a significant element of the subdued tone of Irish consumer sentiment readings in recent years,” said Austin Hughes, chief economist at KBC Bank Ireland. 

“However, those worries don’t fully explain the pronounced lack of any ‘feelgood factor’ among Irish consumers, an absence that might appear at odds with the sustained strength seen in key Irish economic indicators such as last week’s buoyant jobs data for the final quarter of 2019,” the economist said. 

“It simply seems that progress at the level of the individual household from the conditions experienced through the austerity years has fallen short of improvement heralded in much economic commentary,” Mr Hughes added.

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Consumer prices rose by 1.3% in year to January

Consumer prices rose by 1.3% in the year to the end of January, according to the Central Statistics Office, maintaining the level recorded at the end of 2019.

Prices fell on a monthly basis, however, by 0.7%.

According to the CSO prices in education saw the biggest increase over the 12 month period, up 4.1%. 

Alcoholic beverages and tobacco prices were 3.8% higher, while utilities including housing, water, electricity, gas and other fuels cost 3.1% more.

Rents were 4.1% higher in the year, while mortgage interest costs rose by 2.9%.

At the same time communications prices were 10.6% lower; while furnishings, household equipment and routine household maintenance prices were down 2.7%.

Meanwhile motor insurance prices were down 6.9% in the year to January, though health insurance prices were 6% higher.

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Consumer sentiment climbs to six-month high

Consumer sentiment hit a six-month high in January, buoyed by the reduced risk of a disorderly British exit from the European Union.

But sentiment was still sharply lower in January than it was a year ago.

Ireland has remained the European Union’s fastest growing economy during three years of Brexit talks, but consumer confidence faltered when it seemed that the UK could leave without agreeing to a withdrawal deal. 

KBC Bank Ireland’s consumer sentiment index increased to 85.5 in January from 81.4 in December, the third consecutive monthly rise. 

The index was significantly higher than the seven-year low of 69.5 in October but well below 98.8 a year ago. 

“While Brexit-related fears have eased somewhat in recent months, the January reading suggests that consumers remain nervous about the general economic outlook and their own financial prospects,” said Austin Hughes, chief economist at KBC Ireland. 

The recent uptick “looks to be a relief rally rather than a fundamental rethink of their circumstances by Irish consumers”, he said. 

All five elements of the index improved in January relative to December, with the largest gain in relation to jobs, the survey showed.

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Brexit hiatus lifts consumer and business confidence

Progress towards the achievement of a Brexit resolution has lifted consumer confidence this month, new research has found.

But the Bank of Ireland Economic Pulse for November also recorded that despite the brighter consumer mood, Brexit uncertainty continues to weigh on businesses’ investment plans.

The index, a composite of separate measures of consumer and business sentiment, registered at 80.6 for the month, up 3.6 on October, but down 9.3 on a year earlier.

It found that one in six people plan to spend more on Christmas presents this year on the back of an increase in consumer optimism in the period – the first in four months.

Bank of Ireland says this rise was due to the lowered risk of a no-deal Brexit cause by the further extension of Article 50.

Festive cheer also seems to be kicking in, with more people assessing their finances in a positive way heading into the festive season.

Businesses too were feeling better about their situation during the month the survey found, with increases in the index across all sectors compared to October.

However, with the outcome of the UK general election still not clear, business investment into next year is set to remain subdued as many firms place their plans on hold. 

Christmas is a vitally important time for retailers and the Retail Pulse was broadly positive, with one in five expecting their festive turnover to be higher than last year.

The housing pulse also saw a mild bounce in November, with nearly half of people expecting house prices to rise in the next year.

However, three in five predict an increase in rents. 

The Economic Pulse surveys are conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and approximately 2,000 businesses on a range of topics.

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Consumer sentiment slumps further as Brexit rumbles on

Consumer sentiment fell for a fourth successive month for the first time since late 2012 as uncertainty over Brexit continued to weigh on confidence, a survey showed today. 

While the economy here has remained the fastest growing in the EU throughout three years of Brexit talks, consumer confidence took a hit in recent months as the prospects of a no-deal British exit rose. 

The KBC Bank consumer sentiment index sank to 69.5 last month from 75.3 in September, the lowest level in over six years. The index stood at 93.5 a year ago. 

“There is little doubt that the ongoing decline in consumer confidence is largely as a result of continuing nervousness around Brexit,” KBC Bank Ireland chief economist Austin Hughes said. 

“Whereas risks are large and one-sided from a consumer confidence perspective, this has to be weighed against the current reality of healthy gains in employment and improving incomes. So, spending hasn’t stopped but it is notably slower than it might otherwise be,” Mr Hughes said. 

He added that the October reading may also hint at a measure of disappointment with the budget for 2020 when the Government did not implement the tax cuts and spending increases of recent years to set aside funds for firms most exposed to Brexit. 

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