Light at end of tunnel for UK household finances in May
Staff Writer |
UK households reported a reduced squeeze on their financial wellbeing in May, helped by a combination of lower inflation and higher income from employment this spring.
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There were also signs that improved household financial sentiment has started to boost consumer appetite to spend.
Improved labour market conditions continued in May.
The proportion of households reporting concerns about job security was the lowest since the survey began in 2009.
The headline seasonally adjusted IHS Markit Household Finance Index (HFI) registered 44.7 in May, up from 43.4 in April.
The figure signalled a softer budget squeeze, with the latest deterioration being the least marked since the end of 2016.
This release contains the May findings from the IHS Markit Household Finance Index (HFI), which is intended to anticipate changing consumer behaviour accurately.
The HFI is compiled each month by IHS Markit, using original survey data collected by Ipsos MORI.
It is the first consumer survey published each month.
At 49.1 in May, up from 47.4 in April, the index reflecting households’ financial expectations over the next year reached a 21-month high in the latest survey.
Although the index remained below the 50.0 no-change value, it did portray that the majority of households do not expect budgets to worsen considerably.
Households in the Midlands, North West and London were generally more positive towards their budgets.
Meanwhile the highest earners are the most bullish regarding their future financial situation, whereas lower earners remain pessimistic overall.
May data continued to show signs of improving labour market conditions in the UK.
Households reported the strongest growth in income from employment since July 2016, corroborating with marked workplace activity growth.
Notably, concerns around job security were the lowest since the survey began in 2009.
Workers in the East of England noted the greatest degree of confidence towards job stability, whilst those in the North East were the most concerned.
At 78.2 in May, down from 78.6 in April, inflation perceptions were the weakest registered in 17 months.
That said, the figure remained well above the neutral 50.0 threshold, and exceeded the longrun average.
Following the decision to hold the base rate at 0.5% in May, UK household expectations towards the Bank of England move remained broadly unchanged since the preceding survey.
More than half of UK households anticipate a rate rise by the end of 2018, whilst just 26% of respondents forecast a hike by August. ■