Brexit ‘caution’ for Irish consumers and jobs
A slowdown in consumer spending growth and caution in the jobs market may be early signs that Brexit concerns are weighing on households and employers, separate surveys suggest.
Visa says its latest monitor of consumer spending for September, covering all types of spending including cards and cash at bricks and mortar stores and online, showed the slowest growth in six months. The survey by researcher IHS Markit showed consumer spending last month rose 1.5% from September 2017, marking a slowdown from the 2.2% expansion posted in August.
It said household goods, restaurants and bars showed the strongest expansion, while there were good gains by recreation and culture, and food, beverages and tobacco, and transport and communications posted solid growth rates.
Nonetheless, consumer spending on clothing and footwear, health and education and other goods and services fell.
“The weak growth in spending recorded in September marks potential concern from Irish consumers, which aligns with the recent drop in consumer confidence reported elsewhere — amid factors such as the recent budget announcement and ongoing Brexit negotiations,” said Philip Konopik, Visa Ireland country manager. Andrew Harker at IHS Markit said slower growth rates were posted in both face-to-face transactions and in e-commerce.
Conditions in the Irish economy are generally supportive of further increases in expenditure in coming months, but confidence among consumers weakened in August, potentially leading to a reluctance among households to spend,” he said.
Recruiter Morgan McKinley said there was caution ahead of Brexit in the Irish jobs market. “Hiring activity in September was characterised by a degree of caution. This is the second month in a row that we have seen a decline in the number of new roles coming to the market.
“It is too early to tell, but it would indicate a certain level of caution creeping into the marketplace,” said director Trayc Keevans.
“With Brexit on the horizon and the as yet unknown implications, we anticipated that the ensuing complexities and uncertainty would impact company forecasting and resource planning activity in the short to medium term and we believe this has been in evidence this month,” the recruiter said.
Meanwhile, car parts makers in Europe stepped up their warnings over a hard Brexit. Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW and brakes maker Brembo, jointly warned that a no-deal exit would be catastrophic for the industry. The ‘just-in-time’ industry model relied on frictionless trade between the UK and mainland Europe, they said.
If we are continuing to be taken hostage by this situation, the flourishing UK auto industry could come back to the situation it was at 20-25 years ago,” said Roberto Vavassori, a management board member at Brembo and president of CLEPA.
The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world, he said. Vavassori said he felt betrayed that Brembo’s manufacturing in Coventry would be a different prospect post-Brexit.
