Business Irish

Friday 28 October 2016

Saving for houses blamed as retail sales dip in March

Published 29/04/2016 | 02:30

Consumer spending was the big driver of economic growth last year
Consumer spending was the big driver of economic growth last year

The need to squirrel away massive home buyer deposits to meet Central Bank rules has been blamed after retail sales dipped unexpectedly in March.

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Big-ticket items, including car sales, electricals and spending in department stores were all down.

The broad trend in consumer spending remains positive, however. Compared to a year ago the volume of sales was 5.2pc higher in March, and 3.1pc higher in value terms, but the pace of the increase has slowed.

Consumer spending was the big driver of economic growth last year, overtaking exports as the economic recovery filtered through to households, so any change will be closely watched.

Headline retails sales were down 2.1pc in March.

One factor in the slowdown was car sales, which had been particularly strong in the first two months of the year, with an increase of 20pc, before tailing off last month.

In contrast, sales of furniture and lighting and clothing continued to grow by double-digit percentages in March.

Merrion Stockbroker's Alan McQuaid said monthly data can be erratic, but that the underlying trend is positive.

"While most attention was on cars last year and will be again in 2016, personal spending in other areas has picked up in recent months and is becoming more broad-based.

"This can only be good news for retailers and employment prospects in the sector," he said.

Consumer confidence has fallen off since hitting a 15-year high in January, a reflection of growing unease around the potential costs if Britain votes to leave the European Union in June, and the political deadlock at home, Alan McQuaid said.

Property firm Savills' director of research, John McCartney, said the Central Bank's tough mortgage lending rules may be impacting on spending habits.

"The lacklustre figures may reflect the fact that Irish households are continuing to pay down debt - outstanding bank loans were reduced by more than €3.5bn in the year to February. Also, families are saving more as first-time buyers and their parents put money away to fund the larger deposits that are now needed for home purchase," he said. But jobs growth means spending power should remain strong, he added.

Irish Independent

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