United Kingdom: Consumers grow slightly less gloomy in September
September 29, 2017
The GfK NOP consumer confidence indicator edged up from to minus 10 points in August to minus 9 points in September, marking the second consecutive monthly improvement. Despite the uptick, the index remains firmly entrenched in negative territory, where it has been since April last year, highlighting that consumers are broadly pessimistic.
September’s figure reflects an improvement in consumers’ perception of the general economic situation over the past twelve months and for the year ahead, and an increased willingness to make major purchases. However, consumers grew more pessimistic regarding their personal financial situation over the last month and for the year ahead, which could be influenced by the continuing fall in real wages pinching their pockets.
Joe Staton, Head of Market Dynamics at GfK, argues that the rise in consumer confidence may not be durable: “Many commentators expected shoppers to cut back on spending thanks to the lower purchasing power that arises from higher inflation and weak wage growth. But consumers are still spending out there, and have repeatedly defied predictions of a downturn since last year’s Brexit vote, partly by running down savings and/or borrowing more. Indeed, the major purchase indicator has crept up a second month in a row and the savings index has sagged. It’s live now, pay later. This defiant consumer mood seems to be the ‘new normal’. But how long can it last?”
Author: Oliver Reynolds, Economist