Northern Ireland Credit Union Sentiment Survey shows consumers plans for Christmas spend

Posted on: 28 Nov 2023

Survey shows consumers plan for a cautious rather than carefree Christmas spend

• Consumer confidence remains steady, if subdued as Northern Ireland consumers more concerned about economic outlook

• Solid Jobs Market and easing inflation give some comfort, but consumers more cautious about outlook for household finances

• 1 in 2 Northern Irish consumers say they have less money to spend on Christmas than twelve months ago and plan to cut back on presents and going out as a result.

The latest Northern Ireland Credit Union Consumer Sentiment Index published today shows that the mood of Northern Irish consumers remains subdued as concerns about the general economic environment and the cost-of-living crisis at the fore. The findings suggest no major change in thinking from the August survey where consumers were also shown to be cautious in their outlook.

Speaking on the release of the report, Martin Fisher, Northern Ireland Manager, Irish League of Credit Unions said that while it was encouraging that there was a notable drop in consumers saying their household finances have gotten worse, too few feel their finances would improve in the coming 12 months.

“The broadly steady reading for Northern Ireland consumer sentiment in November suggests that while some consumers may be starting to feel that the worst of the cost-of-living shock may be behind them, the economic and financial climate remains challenging for many households.
“We know in the credit union that many people have additional financial pressures which add to the stress of this time of year. Everyone should be able to enjoy their Christmas and we encourage people who may be considering moneylenders or buying on the ‘never never’ to come in and talk to us.  You will find that the cost of a credit union loan will be cheaper and will put less pressure on your household budget in the long run”.
 
Economist Austin Hughes, who prepared the report, said: “Having improved in the previous two quarters Northern Ireland consumer confidence held broadly steady between August and November. In circumstances where similar consumer confidence measures for the UK as a whole, as well as the US and the Euro area, have been very weak in the past three months, this should be seen as a reasonably encouraging performance in terms of the circumstances of the Northern Ireland consumer.
“Over the four readings of Consumer Sentiment carried out on behalf of the Northern Ireland Credit Union Consumer Sentiment Index during 2023, there has been a clear decrease in the number of consumers who expect economic conditions will get worse but no major increase in the number of consumers who expect a material improvement.”  

Weaker consumer sentiment on economic outlook…

Weaker consumer sentiment on the economic outlook for Northern Ireland in the November Index was primarily driven by a drop in the number of consumers who believe the economy will improve in the next 12 months and a small increase in the number expecting a further weakening in the economy.  Concerns about the global economy remain elevated, with a possible large and lasting impact from recent atrocities in the middle east becoming the latest in a long line of shocks creating uncertainty and unease among consumers here and around the world.
This global economic uncertainty, combined with the UK economic outlook being downgraded for 2024 and the possibility of a recession in the Republic of Ireland are having an impact on consumer confidence in Northern Ireland.  Add in volatility in oil prices and pressures on family finances to the mix and it is not surprising that consumers are a little more negative about the prospects for the economy over the next 12 months.

…But positive jobs data means consumers not more fearful about unemployment

Austin Hughes noted that “weakening consumer sentiment towards the economy was not matched in thinking about the jobs market”.  Pointing out that encouraging labour market data was released during the survey period he said; “While redundancy notices continue to run at a notably higher level than in 2022, consumers in Northern Ireland are aware of the generally positive momentum in the local jobs market and see this significantly countering the lacklustre outlook for economic growth.”

Household Finances remain under pressure

While there was a notable drop in the number of consumers saying their household finances had gotten worse in the past twelve months, there has been no pick-up in the number of consumers reporting an improvement in their household finances.
Our sense is that consumers have drawn some relief because the surge in the cost of living and, particularly, in energy prices seen in the latter stages of 2022 has not been repeated of late. Instead, slowing inflation and a growing sense that interest rates may have peaked may have encouraged the view that the worst could be over.
But if Northern Ireland consumers seem to be considering that the worst may be over, they also seem to be contemplating the possibility that what follows may not be dramatically better. Still strained household finances and a recent firming in energy costs could be informing a view that living costs may continue to increase in a manner that will put persistent pressure on the finances of many households.   

Christmas Spending

Christmas is hugely important for most households and a time of increased financial pressure for consumers and special questions asked consumers about their spending power and spending plans this Christmas.
1 in 2 Northern Irish consumers say they have less money to spend on Christmas than twelve months ago and plan to cut back on presents and going out as a result.  Only 5% (1 in 20) say they have more money to spend.  These results are very similar to those reported in the Republic of Ireland Consumer Sentiment Index, emphasising the global nature of the cost-of-living challenges that households now face.
Older consumers are least likely to say they plan to spend less this Christmas.  Families with children are more likely to feel the pinch, and faced as they are with higher energy and other household bills, they are planning on reducing their spending on presents and nights out.
Just over half of consumers (57%) will rely on their current income to pay for Christmas while 28% will dip into their savings.  While 5% plan to borrow to finance their spending, some 7% of consumers say they don’t know how to fund their Christmas spending, hinting that some have little idea if or how they will be able to afford Christmas.