Improved sentiment reading hints that NI consumers start 2025 on a less fearful footing

Posted on: 04 Mar 2025

• Improved confidence reading reflects easing cost-of-living concerns in spite of uncertain economic outlook

• Northern Irish consumers still nervous but not quite as negative about household finances

• Still subdued sentiment survey tone suggests cost pressures have eased but not ended

• Continuing improvement in buying climate likely to translate into fewer cutbacks rather than spending surge

Summary

Northern Ireland consumer confidence improved modestly between November 2024 and February 2025. A continuing easing in cost-of-living pressures means that Northern Ireland consumer sentiment is now at its strongest level in the past two years.

However, if cost pressures have eased, they are far from over for many Northern Ireland households. The February 2025 reading marks a small step in a positive direction but there is still some distance to go. The general tone of the survey is still subdued, suggesting that most Northern Ireland consumers remain cautious and far from carefree.

With household incomes continuing to rise faster than inflation and interest rates falling, Northern Ireland consumers are not seeing quite the degree of pressure on household finances that they felt for much of the past few years.

However, if costs are no longer surging, neither are they falling. So, Northern Ireland consumers remain negative overall on their personal financial circumstances.

While Northern Ireland consumers are somewhat less nervous about their own household finances than they were three months ago, they are a little more nervous about the outlook for the Northern Ireland economy as concerns grow about global economic prospects and the broader geopolitical outlook.  

Although Northern Irish consumers remain overwhelmingly cautious in early 2025, the February Credit Union sentiment survey (in partnership with Core Research) signals a clear easing in concerns compared to the reading for November.

The improvement in consumer sentiment in Northern Ireland in the past three months contrasts with a further deterioration in consumer confidence for the UK as a whole over this period. The recent trend in Northern Ireland consumer sentiment is also somewhat stronger than the effectively unchanged tone of the comparable measure for the Republic of Ireland through the same timeframe.

Section I; Easing in NI consumers cost-of-living concerns continues but caution still prevails as economic outlook grows more uncertain

The February 2025 Credit Union Northern Ireland Consumer Sentiment Survey (in partnership with Core Research) shows an easing in negativity about household finances that more than offset slightly increased worries about the broader economic climate.

As a result, the Northern Ireland consumer sentiment reading for February 2025 was the strongest of the nine quarterly readings seen since the survey commenced at the start of 2023.

Economic uncertainty starts to increase again

The sentiment survey asks Northern Ireland consumers both ‘macro’ questions in relation to the general economic outlook and ‘micro’ questions in relation to their own household finances. 

While most data suggest the Northern Ireland economy performed strongly through the summer and into the Autumn of 2024, recent purchasing manager surveys point to a softening in activity over year end. In addition, the latest forecasts and commentary around local and global conditions emphasise the risks of a poorer outlook for the world economy as well as a much increased level of uncertainty that is seen feeding into some pullback in investment spend and new hiring.

The most recent batch of forecasts have further pared back expectations of what was already likely to be modest economic growth for the UK economy this year. The risk of an even larger downgrade to growth prospects on increasing worries about the possible adverse impact of changes in US trade and tax policy on US multinational firms operating in the Republic.  

Against this backdrop, it is scarcely surprising that Northern Ireland consumers have become more negative about the general economic outlook. Indeed, it could be suggested that the surprising aspect of the diagram below showing responses to the question on Northern Ireland economic prospects is that the weakening in this element of the survey has been so modest of late.


As the diagram shows, consumers in Northern Ireland have been consistently negative about the economic outlook through the past two years. This mirrors the results of similar surveys around the world, reflecting sluggish economic growth, surging costs and a very threatening geopolitical backdrop.

While negative views have outnumbered positive views in all surveys, the degree of concern about the economic outlook evident in January 2025 is notably less pronounced than that seen at either the start of 2023 or 2024. However, there has been some pullback of late, likely reflecting increased nervousness about the prospects for both the British and Irish economies as well as some weakening in Northern Ireland business surveys of late.
 

Employment outlook holding broadly steady on mixed job news and numbers

As the diagram below illustrates, Northern Ireland consumers remained negative overall on the outlook for employment in February.  

However, the survey signals no marked change in the thinking of Northern Ireland consumers on job prospects in the past three months and a clearly less negative assessment than in January 2024 or January 2023 in particular.   


Through the past three months, the news on the outlook for jobs has been quite mixed. Office for National Statistics (ONS) data show that numbers at work in Northern Ireland recovered marginally between the third and fourth quarters of 2024, having fallen sharply in the previous three months but remain slightly lower than the final quarter of 2023. In contrast, data on employee numbers, based on PAYE figures, suggest little change in the number of payrolled employees in Norhten Ireland over the past three months but an increase of 1.0% over the year to January 2025.
 
In the same vein, the unemployment rate fell to just 1.6% from 1.8% three months earlier, but the claimant count and numbers economically inactive increased slightly over the same period. On a positive note, redundancies eased and the survey period saw a significant number of new job announcements.

The employment element of the February survey hints that Northern Ireland consumers may be trying to balance some mixed to broadly positive local developments on the jobs front of late with the risks posed by a threatening global backdrop. In these uncertain circumstances, it might be seen as encouraging that the jobs outlook hasn’t deteriorated in the current survey.
 

Northern Ireland consumers cost-of-living concerns ease further but are far from over

While an uncertain and increasingly threatening global economic backdrop is likely to weigh on Northern Ireland consumers, the reality is that over the past couple of years the major factor influencing consumer sentiment here and elsewhere is the surge in living costs.

As the diagram below indicates, consumers in Northern Ireland still take a negative view overall of their own personal financial circumstances. However, the intensity of pressure on household budgets has eased somewhat as the pace of increase in consumer prices has slowed down and the increase in household incomes has picked up.

As a result, the February 2025 Credit Union Northern Ireland Consumer Sentiment Survey (in partnership with Core Research) shows that consumer thinking here is now far more evenly split than a year ago.
At the start of 2024, there were five Northern Ireland consumers who felt their personal finances had worsened for every two who said they had improved. At the beginning of 2025, the situation is far closer to balance; for every five who say their finances have worsened, there are four who say they have improved.

While living costs remain notably higher than they were a couple of years ago, UK inflation has trended lower through the past year even if there has been a clear uptick in recent months. (UK consumer price inflation stood at 3% in January 2025, up from 2.3% in October but notably lower than the 4% rate seen in January 2024).

Northern Ireland consumers are also seeing a clear easing in borrowing costs with the Bank of England reducing its base rate in August, November and February as well as signalling the prospect of further cuts through 2025.

Significantly, earnings growth in Northern Ireland continues to outpace inflation by a clear margin, as has been the case for most of the past year.  Revenue data indicate that median pay increased by 7.0% y/y in Northern Ireland in January 2025, well ahead of the increase reported for the UK as a whole (+5.7%) as well as significantly outpacing inflation.
Another barometer of local economic conditions and household finances is the rate of increase in house prices, which rose 9% y/y in the final quarter of 2024 in Northern Ireland compared to an increase of just 1.5% a year earlier.

The sense that household finances are gradually moving in a helpful rather than harmful direction at present explains the gradual if uneven easing in negativity on the part of Northern Ireland consumers in regard to their own household finances. However, as the graph above also indicates, it is still the case that slightly more Northern Ireland consumers are negative rather than positive in relation to their household finances.

A recent increase in oil costs and the expectation that inflation could tick higher in coming months, coupled with a strong sense that the surge in prices of recent is unlikely to be reversed, mean that in spite of positive trends of late Northern Ireland consumers remain cautious about their household finances.

The diagram below shows that while easing inflation and improving incomes have materially reduced a gap between the increase in household incomes and outlays that emerged in recent years, there hasn’t been a full catch-up. The associated hit to spending power may still be a source of difficulty for many Northern Ireland households.   

 

Northern Ireland consumers spending plans improve again

A gradual if uneven easing in negativity on the part of Northern Ireland consumers appears to be encouraging a modest improvement in spending plans. 

The February Sentiment survey saw a further improvement in the buying climate, continuing a trend evident of gradual gains seen in the previous three surveys. As a result, the early 2025 reading suggests a clear change in the focus of Northern Ireland consumers from that of a year ago. Although household spending behaviour is still very cautious, it is no longer an environment of widespread cutbacks.   

It remains the case that negative responses (22%) outweigh positive responses (15%) to this question, but these readings are moderately better than the 23-12 split seen in the November survey and markedly improved on the 31-9 gap reported in the January 2024 survey.

Moreover, the change in this element through the past couple of surveys was largely driven by an increase in the number of consumers stating that now is a good time to make major purchases. Even if a significant number of Northern Ireland consumers are either unable or unwilling to make major purchases at present, this suggests that some Northern Ireland consumers who are now more able to spend may also become more willing to spend.

The Northern Ireland Credit Union Consumer Sentiment Survey is a quarterly survey of a representative sample of 350 adults. Core Research undertake the survey administration and data collection for the survey. This tranche of the survey was live between the 6th and 14th February 2025