All signs point to a strong advance in consumer spending and consumption as activity picks up in the domestic sector of the economy. This is good news for sure, though a certain nervousness is still evident and the underlying trends bear scrutiny.

Several forces are in play, a good many of them benign but not all. A lot more people are working, inflation is low, there’s a small increase in actual private sector earnings, a public sector pay rise is on the way, a modest tax cut this year will be followed by another in 2016.

The sharp decline in the price of oil leaves more money in pockets after filling the tank, something which helps rural sectors of the economy in particular.

The euro’s weakness vis-à-vis sterling and the dollar provides another spur as it’s a good deal less expensive for American and British tourists to visit and spend money here.

At this point in the economic saga it would be a great disappointment if all of that was not feeding through into increased trade in the retail and hospitality sectors and improvements in consumer sentiment.

Still, spiralling rental costs and the rise in motor and health insurance premiums demonstrate that the outlook for the punter is not wholly positive.

This is to say nothing at all of dysfunction in the housing market and the crippling shortage of starter homes.

Then there is the mortgage market. If rock bottom interest rates mean that these are good times for tracker loan-holders, there’s a whole swathe of people out there who don’t get the benefit. Certain banks have cut variable mortgage interest rates but others most definitely have not.

Such factors serve to compress the increase in consumer activity. The same goes for bank borrowing rates overall.

Consumers continue to pay down more debt than they take out. In its new quarterly forecast this week the Economic & Social Research Institute noted that household loan repayments in the first seven months of the year exceeded drawdowns by €2 billion.

The totality of homeloans outstanding dropped 4.4 per cent in the year to July, and loans for consumption dropped 2.5 per cent.

Paydowns

If that points to a latent sense of caution on the part of the consumer it’s hardly a surprise. What it suggests, however, is that the uplift in overall spending is sufficient to override the cumulative impact of debt paydowns. After years of sickening decline and stagnation, that’s a pretty good sign.

Furthermore, activity is broadening. It’s long been clear that the motor trade is doing well: car registrations are up 30 per cent this year. At the same time new retail sale figures from the Central Statistics Office show that there’s a good deal more going on.

The value of sales in all businesses excluding motor trades rose 3.7 per cent in the year to August, and sales volume rose 7.6 per cent.

Dig a little deeper.

In the same period the value of clothing and footwear sales rose 8 per cent and and the volume rose 12.8 per cent. Furniture and lighting: value up 11.4 per cent; volume up 17.4 per cent. Hardware paints and glass: value up 6.6 per cent; volume 8.7 per cent. Electrical goods: value up 6.6 per cent; volume up 11.2 per cent. Bars: value up 6.6 per cent, volume up 6.2 per cent.

True, the increase in bar sales could be attributable to tourists.The others, however, suggest that those consumers who have a little more money are happy enough to spend it.

All of this follows a prolonged period in which people shut the spending hatches. Increases in big-ticket sales of furniture and white goods – and, indeed, hardware – point to the release of pent-up demand.

This marks a certain confidence and a sense of greater acceptance of the narrative of recovery even if many find they’re still not seeing it (or enough of it) in their own lives.

The latest KBC Bank/ESRI consumer sentiment survey points to a fractional decline in confidence last month even if the overall assessment was “fairly healthy”, so it’s not entirely a one-way street.

“The September sentiment report probably reflects the difficulty the average consumer has in making sense of seemingly contradictory recent signals both in relation to economic prospects generally and their own financial circumstances,” observed KBC chief economist Austin Hughes.