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Growth in consumer economy back to 2007 levels

Written by Robert McHugh, on 16th Feb 2016. Posted in Ireland

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The Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School have today published their quarterly Consumer Market Monitor (CMM).
The report covers the fourth quarter of 2015 and also provides a review of the full year.
It shows that consumer spending looks set to keep an upward trajectory this year and for the foreseeable future - driven by figures of 1.98 million people currently at work, up by 158,000 since the low point in 2012.

Evidence suggests that pay increases of about 2% were common in 2015 and likely to happen again in 2016.
According to the report, gross disposable income increased by an estimated 7.5% in 2015, an increase level not seen since the boom times.

Increased consumer confidence was also seen in the sales of new cars which were up 30% on 2015. Lower fuel prices have also helped, as will the reductions in tax and social charges coming through in January 2016. 

Retail sales are also improving significantly. Sales volume rose by 3.7% in 2014 and this upward trend accelerated in 2015, with sales volume up by 6.2%.

All retail categories got a boost in recent quarters, and the evidence suggests that 2016 is delivering sales growth for most retailers. Sales of services have also been strengthening, up 4.1% for the year 2014, and up by 5.8% for 2015. 
The indicators are that the consumer economy is now growing strongly, with all types of spending increasing, apart from fuel. In sum, consumer spending is now back to a level of about €90 billion, close to the previous peak in 2007. 
Professor of Marketing at UCD Smurfit School and Co Author of the report, Mary Lambkin says, "Consumer spending accounts for over 50% of GNP in Ireland and is a critical factor in driving recovery in the economy.

"The level of consumer spending is fundamentally dependent on the amount of disposable income circulating, and this has increased significantly in the last year as a result of more people at work. 

"In fact, the increase in disposable income last year was back to the sort of level that we have not seen since the Celtic Tiger years. This increase in incomes, together with greateravailability of credit, is leading to accelerated spending on many categories of goods and services." 
Source: www.businessworld.ie 

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