Obtain free UK financial system updates
We’ll ship you a myFT Every day Digest e mail rounding up the newest UK financial system information each morning.
UK client confidence elevated for the second consecutive month in September to the best degree since January 2022, supported by robust wage progress and easing inflation, based on knowledge revealed on Friday.
The buyer confidence index — a measure of how folks view their private funds and broader financial prospects — rose 4 factors to minus 21 in September, up from a file low of minus 49 in September 2022 and the very best studying in 20 months, analysis group GfK mentioned.
The studying was additionally a lot better than the drop from August’s minus 25 to minus 27 forecast by economists in a Reuters ballot.
Joe Staton, shopper technique director at GfK, mentioned: “Whereas this month’s improved headline rating is sweet information, it’s vital to notice many households are nonetheless combating the price of dwelling disaster and that financial circumstances are robust.”
The survey was carried out within the first two weeks of September, earlier than Financial institution of England policymakers voted on Thursday to maintain rates of interest at 5.25 per cent, the best degree in 15 years.
Sandra Horsfield, economist at Investec, mentioned client confidence was supported by “nonetheless robust wage progress in opposition to a cooling development in inflation and what continues to be low unemployment”.
Inflation eased more than expected to six.7 per cent in August, based on official knowledge revealed on Wednesday. Meals inflation, which primarily impacts folks on decrease incomes, additionally declined to 13.6 per cent final month from 14.8 per cent in July.
Wages in the meantime grew by 7.8 per cent within the three months to July, the quickest tempo since data started in 2001.
The current correction in mortgage rates from their 15-year excessive, following expectations that the BoE won’t enhance the price of borrowing within the close to time period as a lot as forecast a couple of months in the past, may even have helped the development in confidence.
However economists warned {that a} weakening financial system and an anticipated rise in unemployment danger reversing the survey’s improved readings prior to now two months.
Additional pressures on sentiment come from extra folks dealing with larger borrowing prices as they arrive to the tip of mounted mortgages whose charges had been determined when rates of interest had been at file lows.
In September, the GfK index was pushed larger by will increase throughout all its classes. Survey respondents reported a lot brighter views on the final financial image, whereas households’ expectations of their private monetary state of affairs within the yr forward continued to enhance marginally.
Staton mentioned a four-point enhance within the index monitoring how possible households are to make main purchases was notably promising. With lower than 100 purchasing days till Christmas, the rise “would possibly provide some hope to retailers, who know all too effectively that many individuals face monetary strain within the run-up to this yr’s festive season”, he mentioned.
Regardless of the uptick in September and August, sentiments stay in deeply unfavorable territory and under the long-term common of minus 10.
“The fact is that client confidence stays suppressed, and the monetary temper of the nation continues to be unfavorable,” mentioned Staton.
