Spending rise offers hope for retailers
Spending by Irish households has shown signs of picking up, which may be a glimmer of hope for retailers that consumers will increase spending in the coming months.
The Visa survey, with research firm IHS Markit, covers all types of spending, including cash payments. Spending rose at its fastest pace for five months in March, with spending on household goods rising at a significant pace.
Overall spending rose by 2.7% from a year earlier and recovered from a decline in February, after spending in bricks-and-mortar shops rose 2% and online spending climbed 4%.
However, Visa said that the return to growth came only after slight increases in January and February, which meant that growth in the first quarter was the lowest for almost five years.
The Visa survey supports the findings of other surveys and the revenues collected by spending taxes.
The monthly survey by KBC Bank and the Economic and Social Research Institute, published at the start of the month, suggests that consumers were holding back on spending because of fears about the possibility of a hard or crash-out Brexit.
Consumers were putting on hold the buying of pricey items as they “juggled” the Brexit risks against “modest” growth in their personal finances.
Official retail figures showed sales, excluding motor sales, increased in February from January and climbed 5.3% from a year earlier.
And the exchequer, in March, brought in more than it had anticipated from Vat revenues, while new Department of Finance forecasts published this week project the economy will grow strongly this year and in 2020, notwithstanding the Government paring its growth forecasts.
In its survey, Visa said food and beverages and miscellaneous goods and services were the only areas to post declines.
Visa Ireland country manager Philip Konopik said the survey showed a pick-up in spending at the end of a weak quarter. “As the first quarter comes to a close, March saw a return to growth for Irish consumer spending,” he said.
“St Patrick’s Day provided a welcome boost, as the hotels, bars, and restaurants and recreation and culture sectors experienced a rise in household expenditure as the public celebrated the national holiday. There was also a spike in expenditure on household goods, which rose at its fastest rate since November 2015.”
There was “a greater willingness to spend at the end of the first quarter”, which may raise the hopes of retailers amid the economic uncertainty, Visa said.
