CONSUMER CONFIDENCE, CONCERNS AND SPENDING … · global consumer confidence survey troubled economies: consumer confidence is improving ... 09 dec-09 q1 2010 q2 2010 q3 2010 q4 2010

C O N S U M E R C O N F I D E N C E, C O N C E R N S A N D S P E N D I N G I N T E N T I O N S I N I R E L A N DQUARTER 3, 2013

2 IRELAND CONSUMER CONFIDENCE

A SMALL STEP BACK AS CONFIDENCE DECREASES-1 POINT FOR IRELAND IN Q3 2013

IRELANDConsumer confidence down 1 point at an index of 69 in Q3 2013

Recessionary mind-set still evident at 93% (-2 versus Q2)

17% are optimistic about future job prospects (+1 versus Q2)

Only 29% are optimistic about their Finances (-5 versus Q2)

While only 24% are ready to spend (-2 versus Q2)

CONCERNS AND SPENDING INTENTIONS THIS QUARTER VS. LASTBiggest Concerns are Job Security (-1), the Economy (+1) and increasing Utility Bills moves from fourth to joint second position (+5)

81% say they have changed household spending in order to save (+3)

Those with ‘no spare cash’ remains unchanged at 26%, while those paying off debt increases (+1) to 28%. Those saving remains high at 31%

An increase to 77% (+8) for those ‘Switching to Cheaper Grocery Brands’

3IRELAND CONSUMER CONFIDENCE Copyright © 2013 The Nielsen Company

CONSUMER CONFIDENCE SHOWED SIGNIFICANT IMPROVEMENT IN THE UNITED STATES AND WESTERN EUROPEGlobal consumer confidence indexed at 94 in the third quarter, no change from Q2 2013, and a two-point increase from the same period last year (Q3 2012), according to consumer confidence findings from Nielsen, a leading global provider of information and insights into what consumers watch and buy. In the latest round of the survey, conducted between August 14 and September 6 2013, consumer confidence increased in all regions except Asia-Pacific.

Consumer confidence in Europe increased three index points to 74, the biggest quarter-on-quarter increase since Q1 2010 and an improvement from three consecutive quarters fixed at 71. Confidence in North America increased two index points to 98, the third consecutive quarter of increases and hit its highest level since Q3 2007. Marginal consumer confidence increases were reported in Latin America and Middle East/Africa, increasing one index point each to 94 and 92, respectively, compared to Q2. Confidence in Asia-Pacific declined one index point to 104, the first regional quarter-on-quarter decline since Q2 2012.

GIVEN THE SIZE AND SCALE OF THESE ECONOMIES, IT IS ENCOURAGING TO SEE SIGNIFICANT GAINS IN CONSUMER CONFIDENCE WITHIN THE UNITED STATES AND WESTERN EUROPE AS WE CONSIDER WHERE WE WERE LAST YEAR AND LOOK AHEAD TO 2014. AT THE SAME TIME, WE HAVE TO KEEP MODEST DEVELOPING MARKET DECLINES IN PERSPECTIVE. WHILE INDIA IS SIGNIFICANTLY OFF PEAK OPTIMISM OF 131 MEASURED THREE YEARS AGO IN 2010, IT IS STILL ONE OF THE LARGEST AND MOST CONFIDENT COUNTRIES IN THE WORLD, AND THAT HAS AN IMPACT ON THE ENTIRE REGION.

DR. VENKATESH BALA, CHIEF ECONOMIST AT THE CAMBRIDGE GROUP, A PART OF NIELSEN


GLOBAL CONSUMER CONFIDENCE SURVEY

60 COUNTRIES – 3-MONTH TRENDQ3-2013 NIELSEN CONSUMER CONFIDENCE INDEX

*Survey is based on respondents with Internet access. China survey results reflect a mixed

methodology. Index levels above and below 100 indicate degrees of optimism/pessimism.

-3-6

-2+4

0-1

-1

+6

-2

+3

+2

0

-1

-1

-3

+2

+4

-2

-2

+1

-5

+2

+4+5

0+8

+4+3-3+6+1+9+1

0-1

+8+1

+5

-4

+1

+2

-1

-5

+4

+3

+2

+8

-2

-13

+8

0

+22+3

+3+1

+12

84 COLO

MBIA

84 SOU

TH AFRICA

85 TURKEY 87 UN

ITED KIN

GDO

M

87 AUSTRIA 88 ISRAEL

GREECE 48

88 MEXICO

CROATIA 48

92 GERMANY

SOUTH KOREA 54

PORTUGAL 55

94 PERU

**SERBIA 56

95 CHILE

SPAIN

56

96 AUSTRALIA

UKRAINE 59

96 NORWAY

SLOVAKIA 60

97 NEW ZEALAND

FRANCE 61

97 VIETNAM

BULGARIA 63

97 SAUDI ARABIA

POLAND 66 97 CANADAROMANIA 66 97 PAKISTAN

FINLAND 68

98 SWITZERLAND

IRELAND 69

98 UNITED STATES

CZECH REPUBLIC 72

98 SINGAPORE

ESTONIA 72

101 MALAYSIA

JAPAN 74

103 DENMARK

LATVIA 76

106 HONG KONG

TAIWAN

76

109 BRAZIL

VENEZUELA 76

110 C

HINA

NETHERLA

NDS 78

111

UNITE

D ARAB EMIR

ATES

RUSSIA

80

112

THAILA

ND

ARGE

NTI

NA

80

112

INDI

A

LITH

UAN

IA

81

118

PH

ILIP

PIN

ES

BELG

IUM

8

1SW

EDEN

82

EGYP

T

83

0

**SLOVENIA

47

-4

120

IN

DO

NES

IA

IND

EX

COU

NTR

Y

LESS

CONFIDENT

MORE CONFIDENT

+6

ITALY47

+4

HUN

GARY45

NORTH AMERICA LATIN AMERICA EUROPE MIDDLE EAST, AFRICA, PAKISTAN ASIA-PACIFIC

94 GLOBAL

AVERAGE( 0 change from Q2-2013 )

INDEXES ABOVE 100 INDICATE OPTIMISM


GLOBAL CONSUMER CONFIDENCE SURVEY

TROUBLED ECONOMIES: CONSUMER CONFIDENCE IS IMPROVING

60 COUNTRIES – 3-MONTH TRENDQ3-2013 NIELSEN CONSUMER CONFIDENCE INDEX

RECESSION -BATTERED EUROPE SHOWED SIGNS OF RECOVERYSeventy percent of European markets reported consumer confidence increases in the third quarter as improvements across all confidence indicators showed positive, albeit marginal, regional momentum. Positive perceptions about local job prospects (26%), personal finances (36%) and a good time to buy (29%) increased 2, 1 and 2 percentage points, respectively, compared to the second quarter.

Good news was reported among Europe’s most troubled economies, with consumer confidence increases in Portugal, Italy, Greece and Spain. In addition to Portugal’s double-digit confidence boost of 22 index points, other hard-hit austerity markets showed increased optimism. Spain’s index increased eight points to 56, Italy rose six points to 47, and Greece inched up one point to 48. Despite a one-point quarterly confidence decline in Ireland, an index score of 69 was a two-point improvement from one year ago.

120110

1009080706050403020

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GREECEIRELAND ITALYPORTUGALSPAIN


Consumer confidence index scores were highest in Denmark (103), Switzerland (98), Norway (96) and Germany (92), and most improved in Portugal (55), Belgium (81), Spain (56), France (61), the United Kingdom (87) and Italy (47), compared to Q2.

“GERMAN CONSUMERS WERE OPTIMISTIC IN THE THIRD QUARTER, WHICH WAS NOTEWORTHY GIVEN THE SURVEY WAS FIELDED DURING THE PHASE OF ELECTION CAMPAIGNS WHERE COST-CRITICAL TOPICS SUCH AS TAX INCREASES, THE RESCUE OF THE EURO, AND ENERGY COSTS MAY HAVE PLAYED AN IMPORTANT ROLE. RATHER THAN TAKE A PESSIMISTIC VIEW OF THE FUTURE, IT APPEARS THAT GERMANS REMAINED SOMEWHAT UNAFFECTED BY THE POLITICAL ENVIRONMENT AS FUNDAMENTAL ECONOMIC DATA WERE LIKELY PERCEIVED AS ROBUST. AS THE DEVELOPMENT OF COALITION TALKS CONTINUE, HOWEVER, CONSUMER CONFIDENCE SENTIMENT WILL BE CLOSELY MONITORED.”

INGO SHIER, MANAGING DIRECTOR, NIELSEN GERMANY


IRELAND CONSUMER CONFIDENCE Q3 2013IRELAND CONSUMER CONFIDENCE INDEX TREND 2005-2013(VERSUS GLOBAL, EU, UK, FRANCE AND USA)

SLIGHT FALL IN IRELAND’S CONSUMER CONFIDENCE MAY INDICATE A ‘WAIT AND SEE’ APPROACH...Ireland’s consumer sentiment dipped to 69 this quarter (-1pt versus Q2 2013, +2pts on Q3 2012). While people do feel job prospects have improved, they are more negative this quarter in relation to their personal finances and their readiness to spend, reflecting a cautious approach with a seventh austerity budget around the corner on 15th October.

Pieces of positive news around improving general economic conditions in Ireland continue to seep out; unemployment is down (13.3%, Sept 2013, CSO), house prices are rising and inflation is low. Business activity also brightened this quarter as the latest KBC Bank / Chartered Accountants Business Sentiment Study* revealed. It found that a significant number of firms were reporting increased activity levels and among a much broader range of companies. The Nielsen Consumer Confidence survey found that there was also an improved view on general business conditions as 44% of respondents rated them as good/normal, up 5pts on Q2 2013.

112118 117

109 108

77

6366 67 68 68

6561

64 6460

64 6467 69

65 6570

GLOBAL GB IRELAND FRANCE USA

Celtic Tiger Days Recession Ireland now ranks 17th

most pessimistic globally in Q3 2013

100

110

120

130

90

80

70

60

50

40

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

113

96


SLIGHTLY LESS PESSIMISM ON IRELAND’S RECESSIONARY STATUS…While still significantly higher than the European average of 72%, 93% of respondents say Ireland is still in an economic recession, that’s down -2pts on the previous quarter. Those that feel Ireland will be out of recession in the next twelve months has increased this quarter from 10% to 13%.

RECESSIONARY SENTIMENT Q3 2013

PERCENT GLOBALLY SAYING THE COUNTRY IS IN A RECESSION

Source: Nielsen Global Online Survey - Q3 2013

66%

63%

74%

72%

47%

58%

NORTH AMERICA

LATIN AMERICA

MEAP

EUROPE

ASIA PACIFIC

GLOBAL

93%

IRELAND

SAY WE ARE STILL INRECESSION


PERSONAL FINANCES AND READINESS TO SPEND

‘STATE OF PERSONAL FINANCES / READINESS TO SPEND?’ Q3 2013 IRELAND

PERSONAL FINANCES ARE GOOD / OR EXCELLENT

IT IS A GOOD TIME TO BUY THINGS I WANT OR NEED


BIGGEST CONCERNS AND SENTIMENTSJob Security continues to be the primary concern this quarter (-1). Increasing Utility Bills takes a jump on the list (+5) and moves into joint second position with the economy (+1). Our overall second biggest concern this quarter remains unchanged with Increasing Utility Bills at 18%.

As unemployment rates fall to their lowest levels in three years, the percentage of people who think job prospects are good or excellent increases to 17% this quarter (16% in Q2 2013), with European and Global scores also showing an improvement. However, there is slightly less optimism around personal finances. Those who feel their personal finances over the next twelve months are good or excellent falls from 34% in Q2 2013 to 29%. Furthermore, only 24% feel it is a good time to buy the things they need or want, compared to 26% last quarter.

GLOBAL55% 36% 29% (-5)

GLOBAL

EUROPE

EUROPE

IRELAND

IRELAND38% 29% 24% (-2)


Irish consumers have not stopped changing their spending habits in order to save money. This score rose again this quarter with 81% of respondents saying that compared to this time last year they had changed their spending to save on household expenses (+3pts on Q2 2013). This is the highest score of all European countries (joint highest position with Italy) and 21pts higher than the European average of 60% illustrating the strong reaction Irish consumers are continuing to have to their changed economic circumstances.

‘COMPARED TO THIS TIME LAST YEAR, HAVE YOU CHANGED YOUR SPENDING TO SAVE ON HOUSEHOLD EXPENSES?’ Q3 2013

HAVE WE CHANGED SPENDING HABITS

81%78%

85% 84% 81%

Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012

IRELAND



PUTT

ING

INTO

SAV

ING

S

31% 28%

26%

22% 21% 20%

15%

10%

4% 3% 3%

PAYI

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-4% +1% +1 -4% +1% -1% -2%

SAVING AND DISCRETIONARY SPENDING INTENTIONSThose saying they ‘have no spare cash’ remains unchanged at 26% this quarter, although still high compared to the European average of 21%. Once essential living expenses are covered; over one third of Irish respondents (31%) are putting spare cash they do have into savings, while 28% are paying off debts.

Spending on new clothes is only spending area to increase on the last quarter with 20% choosing to spend their spare cash here (+1pt). Spending on home improvements/decorating (21%), out of home entertainment (15%) and retirement fund (4%) are all unchanged on Q2 2013. Spending on holidays saw the largest decline with 22% choosing to spend their spare cash here (-4pts).

WHERE DO WE SPEND OUR SPARE CASH?

“Q - ONCE YOU HAVE COVERED YOUR ESSENTIAL LIVING EXPENSES, WHICH OF THE FOLLOWING STATEMENTS BEST DESCRIBES WHAT YOU DO WITH YOUR SPARE CASH...?” Q3 2013 IRELAND

(% chg is versus Q2 2013)

Source: Nielsen Global Online Survey - Ireland Results Q3 2013


“Q. COMPARED TO THIS TIME LAST YEAR, WHICH OF THE FOLLOWING ACTIONS HAVE YOU TAKEN IN ORDER TO SAVE ON HOUSEHOLD EXPENSES? Q3 2013 IRELAND

HOUSEHOLD SAVING STRATEGIESNo sign of Irish consumers loosening the purse strings yet as respondents cutting spend to save has increased again in many areas this quarter. There has been a significant increase in the percentage saying they have switched to cheaper grocery brands at 77% (+8pts), this is the highest level of all European countries and 24pts higher than the European average of 53%. While saving on gas and electricity has decreased this quarter at 63% (-9pts).

In terms of lifestyle choices respondents say they will spend less on new clothes (73%, +4pts) and use their car less often (42%, +5pts) while those choosing to cut down or buy cheaper brands of alcohol has also increased at 32% (+2pts).

Furthermore there is no end in sight as many respondents feel they will continue to use these saving strategies once economic conditions improve.

HOUSEHOLD SAVING STRATEGIES

DOMESTICSwitch to Cheaper Grocery Brands 77% (+8%)

Save on Gas & Electricity 63% (-9%)

Cut down on Telephone Expenses 51% (+3%)

Delay Upgrading PC or Mobile 51% (+7)

Look for Better Deals on Loans etc. 44% (-1%)

Delay Replacing HHLD items 44% (+3%)

LIFESTYLESpend Less on New Clothes 73% (+4%)

Cut down on Take-Aways 62% (+2%)

Cut down on OOH Entertainment 61% (-1%)

Cut down on Holidays/Breaks 53% (-1%)

Use my Car less often 42% (+5%)

Cut Down /buy Cheaper Brands of Alcohol 32% (+2%)

Cut down on At-Home Entertaining 30% (+6%)

(% chg is versus Q2 2013)

Source: Nielsen Global Online Survey - Ireland Results Q3 2013


Hungary

Global Avg

China

Japan

Belgium

Czech Republic

Germany

Denmark

Estonia Finland

France GB

Greece Ireland

Italy

Netherlands

Norway

Poland Russia

Sweden

Turkey

Saudi Arabia

Mexico

US

Canada

Brazil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0% 10% 20% 30% 40% 50%

SWIT

CH

ED TO

CH

EAPE

R G

ROC

ERY

BRAN

DS

WILL CONTINUE TO SWITCH TO CHEAPER GROCERY BRANDS POST RECESSION

Spain EU Avg


SWITCHING TO CHEAPER GROCERY BRANDS

‘COMPARED TO THIS TIME LAST YEAR, HAVE YOU CHANGED YOUR SPENDING TO SAVE ON HOUSEHOLD EXPENSES?’ Q3 2013

SWITCHING TO CHEAPER GROCERY BRANDS IN LAST YEAR / WILL CONTINUE TO DO SO POST RECESSION

BUBBLE SIZE: CONSUMER CONFIDENCE INDEX LEVEL


SUMMARY: ONE SMALL STEP BACK BUT SOME POSITIVE INDICATORS TOOWhile the drop in consumer confidence is not significant this quarter, it does reflect the volatile sentiment which still exists among Irish consumers, even in the face of positive economic news for the country. However there is some good news to be taken from the latest data release, with more respondents feeling that job prospects and general business conditions are good, as reflected in falling unemployment rates and increasing business activity.

With the October budget figures released and at the lower end of the scale (an adjustment of €2.5bn. as opposed to €3.1bn.) it is hoped that the final quarter of 2013 will see certainty return for consumers as we head into the important Christmas shopping period. While consumers are expected to continue their cautious spending approach, it is hoped that with time the level of fear over job security and the future in general will decrease, allowing some savings to be released into the economy.

Sources:*Source: KBC Bank / Chartered Accountants Business Sentiment Study, published 10 October 2013 http://www.kbc.ie/media/BusinessSentimentQ3132.pdf

“IT IS DISAPPOINTING TO SEE A SMALL DECREASE IN CONSUMER SENTIMENT THIS QUARTER, JUST AS IRELAND WAS ON AN UPWARD TREND, HOWEVER TAKING INTO ACCOUNT THE UNCERTAINTY SURROUNDING THE OCTOBER BUDGET AND THE END OF THE GOOD WEATHER IT IS NOT SURPRISING THAT PEOPLE FEEL A LITTLE GLOOMY. MORE SIGNIFICANT IS THAT AS TIME GOES ON SAVING STRATEGIES ARE GROWING IN USE AND BECOMING MORE ENTRENCHED IN CONSUMERS’ MINDS AND THESE POSE A HUGE CHALLENGE FOR RETAILERS AND MANUFACTURERS.”

SHANE DALY, NIELSEN IRELAND

IRELAND CONSUMER CONFIDENCE

ABOUT NIELSEN

Nielsen Holdings N.V. (NYSE: NLSN) is a global information and

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and consumer information, television and other media measurement,

online intelligence and mobile measurement. Nielsen has a presence

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ABOUT THE NIELSEN GLOBAL SURVEY The Nielsen Global Survey of Consumer Confidence and Spending

Intentions was conducted between August 14 and September 6, 2013

and polled more than 30,000 online consumers in 60 countries

throughout Asia-Pacific, Europe, Latin America, the Middle East,

Africa and North America. The sample has quotas based on age and

sex for each country based on their Internet users, and is weighted to

be representative of Internet consumers and has a maximum margin

of error of ±0.6%. This Nielsen survey is based on the behavior of

respondents with online access only. Internet penetration rates vary

by country. Nielsen uses a minimum reporting standard of 60 percent

Internet penetration or 10M online population for survey inclusion.

The China Consumer Confidence Index is compiled from a separate

mixed methodology survey among 3,500 respondents in China.

The Nielsen Global Survey, which includes the Global Consumer

Confidence Index, was established in 2005.

CONSUMER CONFIDENCE, CONCERNS AND SPENDING … · global consumer confidence survey troubled economies: consumer confidence is improving ... 09 dec-09 q1 2010 q2 2010 q3 2010 q4 2010

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