UK consumer confidence stays muted, outlook for retailers is weak
UK consumer confidence saw a surprising uplift in September, a new report showed on Friday, with the researchers behind it suggesting that “consumers are keeping their fingers crossed in the run-up to October 31.”
The monthly report, prepared by GfK, showed a two point rise overall, although confidence is hardly running riot as that increase took it to only -12. That said, all five of the key measures that GfK looks at managed to increase.
As mentioned, the overall index score was up two points compared to the previous month, but it's worth also noting that it was down three points year-on-year, so consumers are still feeling less buoyant than they were in September 2018.
As is often the case with this survey, those consumers who were polled seemed to be feeling a bit better about their own personal situations than the outlook for the country as a whole. The measure for their personal financial situation over the last 12 months was at +2, which was up three points from last month and even up one point from a year ago. And looking forward to the next 12 months, the measure was up two points at +4 compared to August, although it was down one point year-on-year.
Their outlook on the general economic situation over the last 12 months remains gloomy however. Although it was up two points compared to last month, it sat at -32, which was four points worse than a year ago.
And that same measure looking at the 12 months ahead was even worse. It rose 3 points month-on-month, but only to -35, and that was a whole eight points worse than last year.
The major purchase index doesn't look brilliant at either and this is significant because it indicates how willing consumers are to spend on expensive items. For September, it was up two points month-on-month at +3, but a year ago it was at +6. Given that the last year hasn't exactly been a spending jamboree on the high street and consumer spending intentions are more muted today than they were 12 months back, it doesn't suggest that there are good times ahead for retailers.
Joe Staton, Client Strategy Director at GfK, said: “More mixed signals this month as consumers continue to feel less than positive about the state of their personal finances and the general economy. Yes, all sub measures are higher, but they are anaemic in the case of our purchase intentions and how we view our wallets, while the results on the wider economy are still depressed.
“Since the Brexit referendum we have witnessed a long succession of negative overall index scores with the overall trend downwards. This month, British consumers appear to be treading water during this wait-and-see run up to October 31. Confidence is an important indicator which typically increases as the economy expands and decreases when the economy contracts and so far, consumer confidence is holding up. We certainly have a long way to go to match the record low headline score of -39 witnessed during the early days of the last recession. But will it stay that way? You can almost sense people are keeping their fingers crossed.”
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