Consumer spending represents over 60% of the economy here and there are signs of recovery after seven years of decline in a row.

This is according to the Marketing Institute of Ireland and UCD’s Smurfit Graduate Business School.

Their consumer market monitor, which draws on a range of data from the CSO, the Central Bank, the ECB and the European Commission, puts consumer confidence at its highest level in seven years.

The authors of today’s report – which covers the second quarter of the year – said that the improving confidence has begun to feed through into consumer spending.

They noted a major turnaround in sales of new cars, while also reported much greater activity in the property sector with 28,500 house sales completed last year – an increase of 36% on 2012.

They also said that retail sales have shown more buoyancy this year, with sales volumes up 2.8% in the first quarter of 2014 compared to the same time the previous year.

Several retail categories have shown substantial growth including home furnishings which rose by 21%, while clothing and footwear sales increased by 9.1%.

“The positive shift in consumer confidence points to a potential turnaround in the Irish economy and marks an important psychological milestone as people are feeling more comfortable to spend again,” commented Tom Trainor, the chief executive of the Marketing Institution.

He said this will hopefully lead to a virtuous cycle of spending as businesses feel more confident to expand or hire more staff, which in turn could result in another boost in consumer spending.

Mary Lambkin, Professor of Marketing at UCD Smurfit School, said that consumer spending is affected by the combined influences of how much money people have available to spend coupled with their confidence in spending it.

“Disposable incomes are still under pressure but increasing confidence coupled with greater availability of credit is at last leading to significant growth in many categories of goods and services,” the Professor added.

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