UK consumer confidence improves but stays negative overall

The regular monthly report from GfK showed an increase in four of the five measures on which it bases its index. But while the overall score was up two points compared to June, it was down one point year-on-year, not exactly showing consumers in an upbeat mood.Their view of their personal financial situation over the last 12 months improved by two points compared to June to +1, which is the same as it was in July last year. And they seem to be quite upbeat about their personal financial situation over the next 12 months, despite Brexit-linked warnings of an oncoming recession. That particular measure rose five points month-on-month to +7, again, the same level as July 2018.

Their view of the wider economic situation of the country seems to be more pessimistic however. It remained at -32 for July, the same as it had been in June and four points lower than July last year. And they think the wider economic situation in the 12 months ahead will stay shaky. That measure was at -32, only marginally better than the -33 last month and much worse than the -26 of July 2018.What does this mean in terms of the major purchase index? Well, perhaps consumers have just become fed up of waiting to spend their cash, but they seem quite positive on splashing out. The index was at +6 for July, up from +4 in June and -2 last July.Joe Staton, Client Strategy Director at GfK, said: “Pre-Brexit consumers are marginally more bullish this month with improvements in levels of confidence across most measures. Although it’s too soon to judge any impact of a post-Boris bounce, we can report a boost in attitudes to our personal financial situation in the face of low interest rates and day-to-day inflation, a buoyant labour market and growth in real wages. “This confidence is further reflected in a six-point jump in the Major Purchase Index. This mirrors the ongoing resilience in consumer spending, a key driver of economic growth and stable retail sales figures. Consumers have generally been less affected by Brexit uncertainties than business since the referendum. However, the coming months to the October 31 departure date will test the strength of this confidence. Will consumers greet the Halloween Brexit deadline with hurrahs or howls?”

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