CONSUMER confidence improved marginally in Northern Ireland over the summer months, a new economic barometer has shown.
A more resilient economy and with lower oil prices easing worries about winter heating bills, lifted the mood, according to the quarterly survey on behalf of the Credit Union movement, which sampled 350 adults across the north.
But three out of four respondents still see higher borrowing costs adding to cost of living pressures, with 14 consecutive months of rising interest rates negatively impacting household finances.
And a leading economist, interpreting the survey findings, cautioned: “The message is one of a Northern Ireland consumer who is still cautious rather than carefree.”
Austin Hughes said that consumers (who were questioned for the survey August 4 and 28) remain worried about the economic outlook and their own household finances.
But this latest survey suggests these worries are gradually becoming less intense than they were through last winter. For most northern Irish households, the past eight months has not proven quite as severe as had been feared.
“It should be emphasised that the responses given to the key questions in the survey suggest the mood of consumers in Northern Ireland is still fairly downbeat. This is to be expected as economic and financial conditions remain very challenging and an uncertain outlook carries significant risks”.
He said the improvement in consumer confidence has coincided with a much better than feared out-turn for the local economy in the first quarter of the year, with the NI Statistics and Research Agency’s (NISRA) composite economic index increasing 1.2 per cent quarter on quarter to stand 1.9 per cent higher than a year earlier.
But he cautioned that although the survey is signalling a clear improvement in consumer thinking, it is not suggesting that Northern Irish consumers are setting aside still serious issues relating to economic prospects.
“The change in consumer thinking on the economy is largely driven by a drop in the number of consumers with a negative outlook rather than by a rise in consumers with a positive outlook,” Mr Hughes said.
Martin Fisher, ILCU Northern Ireland manager, said: “The findings of our August consumer sentiment survey reflect what we are seeing in credit unions throughout Northern Ireland.
“Our members are concerned as to what the winter may bring in terms of fuel prices and cost of living increases, but they are not as pessimistic as they were at the start of the year.
“Many are willing to spend prudently while managing their savings for a ‘rainy day’ and are leveraging the low interest loans from their credit union to fund larger purchases.”
One element of the Credit Union NI consumer sentiment survey that was weaker in August than in April was in regard to consumer thinking on the outlook for jobs.
This reflects the official labour force survey data which showed a modest drop in employment in the second quarter of 2023, following a small rise in the previous quarter, as well as a marginal rise in unemployment.
Mr Hughes added: “Our sense is that consumers' outlook on jobs may also have been heavily influenced by some very high-profile lay-off announcements through the survey period that hint at a notably more testing jobs climate, a development that is also signalled in official data indicating a marked pick-up in planned redundancies of late.”
Some 59 per cent of respondents believe Bank of England interest rate increases have had a negative impact on their household finances while just one in nine (11 per cent) say that the impact has been positive.
Seven out of 10 consumers in Northern Ireland think higher interest rates will damage the economy, with only 11 per cent suggesting the impact will be positive.
Northern Irish consumers remain cautious in their spending plans, but there was a marginal improvement in the buying climate between April and August, with a small group of respondents more willing and able to spend in the months ahead.
