August 2024 Consumer Sentiment Index NI | Published: 06/09/2024

Northern Ireland consumer confidence improves further through summer 2024

Sentiment up aligned to recent easing in cost-of-living pressures, but Northern Ireland consumers cautious about the months ahead.

Lower inflation of late, softening in energy prices and interest rate cut all likely contributors to more positive sentiment.

Friday 06 September: Findings from the latest quarterly Credit Union Northern Ireland Consumer Sentiment Survey (in partnership with Core Research) shows that Northern Ireland consumer confidence showed a further clear improvement between May and August 2024.

A continued easing in inflation coupled with improving incomes has reduced, but not entirely removed, concerns around the cost-of living.

Stronger than predicted economic activity, locally and internationally, has also lessened worries about a markedly poorer economic and financial environment. The sentiment survey also shows a pick-up in consumers’ spending plans, likely boosted by discounting in the summer sales and overall, these developments have translated into an improvement in household spending plans.

The August 2024 index results suggest that the economic and financial fears of Northern Ireland consumers have eased notably over the past three months, continuing a trend evident since the first tranche of research in January 2023. It is important to emphasise however that the survey also indicates that, in spite of an ongoing easing in worries, the concerns of Northern Ireland consumers around living costs and an uncertain economic outlook are far from over.

The trend in Northern Ireland consumer sentiment both over the past three months and more markedly over the past year has shown a notably stronger improvement than that seen in comparable sentiment surveys both for the Republic of Ireland and for the UK as a whole.

While the details of the Northern Ireland consumer sentiment survey show a clearly less negative trend in thinking on the economic outlook and prospects for jobs between May and August 2024, the main driver of the improvement in Northern Ireland consumer confidence of late has been an easing in cost-of-living concerns and an associated pick-up in spending plans.

The sense that cost-of-living worries have reduced but are not fully removed from consumer thinking is evident from a downgrade of the outlook for household finances over the next twelve months. This likely reflects concerns about higher energy bills and other seasonal pressures on household budgets in the months ahead.

The broad message of the latest Credit Union Northern Ireland Consumer Sentiment Survey is one of an improvement but one that remains some considerable distance from an ‘all clear’ in terms of the economic and financial conditions that face households in Northern Ireland. In this context, it should be noted that negative responses continue to outweigh positive responses across all the main elements of the survey even if the gap between the two is generally continuing to narrow.

In response to a special question in the August survey, Northern Ireland consumers gave mixed responses as to whether their financial circumstances were now better or worse than they expected at the start of 2024. While one in seven say their household finances are now better than they expected at the start of the year, twice as many, or one in three Northern Ireland consumers say their household finances are worse than they thought they would be at the start of the year. This finding emphasises the continuing financial pressure many Northern Ireland households continue to face.

Commenting on the findings, Martin Fisher, from the ILCU said; “The improvement in Northern Ireland consumer sentiment over the summer has been very encouraging and aligned to the return of Stormont and broader work of Government as well as wider societal and international factors.

“The future hesitancy noted in the research is understandable given ongoing cost of living pressures and potential seasonal increases as well as anxiety around what the autumn statement from the Chancellor might bring. Our member credit unions are there to support individual members to manage these pressures and plan for positive occasions.

“Looking to the rest of the year and beyond, we will continue to engage with Government and relevant stakeholders to support the growth of credit unions, aligned to their role in Northern Ireland’s economic development”.

Economist Austin Hughes commented; “The clear message of the sentiment survey is that financial pressures on Northern Ireland households and uncertainty about the economic outlook remain major concerns even if there are also encouraging signs that conditions show a clear improvement of late from the difficulties of recent years. In coming months, consumer confidence may be heavily influenced by how much energy bills rise over the winter. “

The full report with commentary is attached. Key findings include:

41% believe the economy will worsen over the next 12 months (down from 42% in May 2024) while 32% believe it will improve (up from 29% in May 2024).
Unemployment remains a concern. 35% of respondents believe it will rise in the next 12 months (versus 36% in May 2024) while 29% believe it will fall (versus 26% in May 2024).
40% believe the financial situation of their household is worse now than 12 months ago (versus 48% in May 2024), while only 25% believe it has improved (no change from May 2024).
28% feel the financial situation of their household will improve over the next 12 months (versus 29% in May 2024), while 34% believe it will worsen (up from 29% in May 2024).
24% believe now is a bad time to purchase a big-ticket item (versus 33% in May 2024) while 9% believe it is a good time (versus 8% May 2024).