The first quarterly consumer confidence index from Danske Bank is out, showing the beginning of the effect of the coronavirus pandemic.
Danske Bank publishes its consumer confidence index for Northern Ireland four times per year, providing businesses with a valuable barometer of changes in purchasing behaviour over time. We all know that the lockdown has dramatically cut consumer purchasing ability, but what about the early March period before the official lockdown began?
The Q1 2020 report has just been released, covering the period from January to the end of March this year when the pandemic was taking hold. Even at this point, the data shows a sharp decline in consumer confidence. The index normally fluctuates by a few points per quarter, but fell from 129 in the fourth quarter of 2019 to 119 by March 2020. The difference when compared to the same period last year is even more striking, as last year's Q1 index was at 139.
This is the lowest reading on the index since 2013, and figures are expected to fall even more dramatically during Q2 as the effect of the lockdown and uncertainty about jobs makes consumers less able and willing to make significant purchases. This survey was carried out in March and only some of the responses captured consumer sentiment after the lockdown order was given.
Some key stats from the report include that 36% of people expect their finances to worsen over the next year, and 43% were concerned about global financial risks even before the lockdown order came. A high percentage of respondents were also concerned about financial risks from Brexit, but the return of the Stormont Executive provided some confidence to NI consumers.
Purchases of expensive items such as cars, furniture, and more dropped, and spending on holidays and restaurants is expected to fall sharply. Sectors doing particularly well during the lockdown include food and drink, take away meals, cleaning supplies, toiletries, and entertainment products such as streaming subscriptions and video games.
Danske Bank's Chief Economist Conor Lambe commented on the report: "The coronavirus pandemic was the main factor that contributed to the fall in confidence levels in the first quarter of the year, with notable declines in sentiment relating to how people felt about their future financial positions, job security and spending on expensive items. [...] Looking forward, confidence levels are one of the factors that will influence the pace of the recovery in consumer spending once the lockdown measures begin to be gradually lifted."
Source: Written based on press release
