There was no sign of consumers tightening their purse strings ahead of the Budget this week as Visa’s Irish Consumer Spending Index, which measures expenditure across all payment types (cash, cheques and electronic payments), signalled the fastest acceleration in consumer spending in six months for the month of September.
Household expenditure was up +3.1% year-on-year last month, a faster rise than in August (+2.3%) and the sharpest overall since March (+4.2%). Looking at the third quarter of the year as a whole, spending rose +2.6% year-on-year, the strongest pace of expansion since the final quarter of 2016 (+3.9%).
For the first time in a year, consumers returned to the high street as growth in Face-to-Face spending was recorded. At +1.8% year-on-year, the pace of increase was modest, but represented a significant turnaround for the Irish retail sector following a -2.2% fall in expenditure in August and a consistent decrease for the past eleven months (since September 2016 at +0.7%).
Growth in Face-to-Face spending for September still lagged behind growth in eCommerce spending, however. This month saw a marked rise of +5.4% year-on-year, although this was the weakest expansion in eCommerce spending for five months.
A factor for the upsurge in Face-to-Face spending could be attributed to the recent recovery in Clothing & Footwear, which continued in September with spending at +5.8% year-on-year as shoppers pick up winter clothing. Moreover, the rate of expansion quickened for the fourth month running and was the strongest in 16 months.
As was the case in August, the Household Goods sector posted the strongest expansion of the eight monitored categories in September (+10.8%). Spending growth in the sector was the fastest since May 2016. A sharp rise in expenditure was also recorded in Hotels, Restaurants & Bars (+8.0%), where growth rebounded from the previous month (+0.9%). The Recreation & Culture sector was also a strong performer, with an increase of +5.3% for the month.
After having fallen fractionally in August (-0.1%), spending increased in the Food & Drink sector in September (+3.8%). Growth has now been recorded in six of the past seven months, with the latest rise the fastest since April. Meanwhile, a modest expansion was noted in Transport & Telecommunication (+2.2%).
Philip Konopik, Country Manager, Ireland, Visa said:
“This month’s Irish Consumer Spending Index paints a positive picture for the Irish retail sector, which enjoyed its best quarter this year. eCommerce continued to drive the growth in spending, however, Face-to-Face spending also played its part, demonstrating its first increase in twelve months. Overall, September’s expenditure across nearly all categories was positive – the only sector to see a drop-in spending was Health & Education.”
Andrew Harker, Associate Director at IHS Markit said:
“The September CSI data completes a solid quarter for Irish household spending. Overall, Q3 looks to have been the best of 2017 so far, with growth supported by strengthening consumer confidence, higher wages and improving job prospects. A key highlight from the latest findings is a return to growth of Face-to-Face expenditure, providing some welcome good news for the high street.”