Domestic economy performing strongly despite weakening consumer sentiment and Brexit uncertainty – BPFI SME Market Monitor11th June 2019
Retail sales reach record high in April
Largest increase in annual employment growth since Q3 2007
Decrease in consumer sentiment from 98.8 in January 2019 to 89.9 in May 2019.
The latest BPFI SME Market Monitor prepared by EY-DKM Economic Advisory Services, and published today by Banking & Payments Federation Ireland (BPFI), shows buoyant growth in the domestic economy driven by a strong labour market despite a weakening in consumer sentiment due to ongoing Brexit uncertainty.
Tracking trends across 15 different indicators which are important for the performance of the SME sector, the latest SME Market Monitor presents some key highlights:
- Irish households continue to loosen the purse strings. In April, retail sales reached a record high, increasing by 2.1% on the month.
- Q1 2019 saw significant improvement in labour market indicators. Annual employment growth accelerated to 3.7% in Q1 2019 – the largest increase since Q3 2007 – and unemployment fell to a cycle-low of 4.6% in April.
- Brexit preparations in the beginning of 2019 boosted activity across the manufacturing sector. However, the sector continues to lose momentum.
- Consumer sentiment has decreased from 98.8 in January 2019 to 89.9 in May 2019.
Providing her assessment of the current SME environment, Annette Hughes, Director, EY-DKM Economic Advisory, outlines the significant mismatch evident between weaker consumer sentiment on one hand – driven in part by ongoing Brexit uncertainty – and the buoyant labour market and strong household spending on the other:
“For many, Brexit remains firmly in the background , despite the positive economic news at home. Until such a time as there is a clear outcome for Brexit, this ambiguity is likely to continue to weigh on consumer and business sentiment.”
“While Brexit brings potentially severe implications for Irish consumers and businesses alike and is weighing on sentiment, current indicators point to a more positive story in the domestic economy. The labour market continues to outperform expectations – driving strong growth in consumer spending, a key indicator for SMEs. Meanwhile, new SME lending in Q4 2018, although down 5.6% on the corresponding figure last year, was up strongly in year-on-year terms in the preceding four quarters, especially in the property and agri-food sectors.”
The BPFI SME Market Monitor is available on the BPFI website here.
Notes: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland and the Fintech & Payments Association of Ireland, BPFI has some 100 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Contact: Jillian Heffernan, Head of Communications, BPFI, Ph: 01 4748835 / 087 9016880
Pia Phelan, Senior Communications Manager, EY Ireland, Ph: 087 9327702