January consumer spending growth quickens

The latest Visa Europe Irish Consumer Spending Index shows that there was no slowdown in consumer spend in January after a year-on-year increase of 7.2% was recorded during the month across all payment methods.

In fact this was higher than the 6.5% increase seen in December and the second-sharpest expansion since the series began in September 2014 (just behind November 2015’s record).

Increased consumer spending on leisure activities in January was highlighted by a double-digit expansion in spending in the Hotels, Restaurants & Bars category (up 12.2%).

Consumer spending has been helped by higher wages and reduced unemployment. Wages rose 2.7% year-on-year in the third quarter of 2015.

There was even a larger increase in face-to-face expenditure in January than that seen at the end of 2015, with the rate of expansion accelerating, up 5.6%. This was also the second-sharpest such growth rate since the series began.

“The start of 2016 showed no let-up in consumer spending following the Christmas holidays as the Visa Europe Irish Consumer Spending Index signaled a further substantial upturn in household expenditure,” commented Andrew Harker, Senior Economist at Markit, the financial information service provider that compiled the report.

“The rate of growth even quickened from that seen at the end of last year, with consumers happy to spend on going out as well as on big ticket items. Strong consumer confidence and falling unemployment suggest that there is little prospect of a slowdown in growth in the near-term at least.”

The fastest increase was again in Recreation & Culture.

The sector registered a considerable expansion of 14.7%, a new record, boosted by holiday bookings with consumers eager to beat the January blues by opting for holiday packages with travel agents.  The Irish Travel Agents Association reported that its members had seen an unprecedented level of booking enquires during the month with some members recording sales increases of up to 40%.

“The year-on-year increase in consumer spending during January is a very positive performance, particularly as it builds on growth through 2015,” said Philip Konopik, Country Manager for Visa Europe in Ireland, ”It’s reflective of the improvement in overall consumer confidence, particularly in terms of sales of big ticket items like cars and holidays in January.

“The real highlight is that all sectors in the economy benefited from the rise in consumer spending.  The high street was a key beneficiary, with the second-highest level of growth in face-to-face spending recorded since we launched the Consumer Spending Index.”

The full report can be read online at www.visaeurope.com/newsroom/