British consumer confidence has grown to the highest level since September last year, thanks to an improvement in sentiment around personal finances and a less pessimistic view of the year ahead.
According to the latest Consumer Confidence Index from GfK, consumer sentiment rose to -10 in May compared to April’s index reading -13.
This not only indicates that British consumers are at their cheeriest since September, but it also beat all forecasts in a Reuters poll of economists.
All but one of the measures used to determine the overall consumer confidence index had shown improvements, although many of the scores were still lower than the readings in May last year.
In particular, there was a big split between households’ relatively upbeat assessment of their own financial situation and the somewhat bleak assessment of the broader prospects for the economy.
Nonetheless, the solid demand from British consumers defied the wider economic uncertainty among businesses due to Brexit.
However, GfK said it expected further gains in consumer confidence to be limited while it remained uncertain how the UK would leave the EU on the newly set Brexit date in October.
“Despite a backdrop of Brexit-related change and complexity, and price rises for most household bills in April, consumers have managed a seasonal spring in their step with a three-point uptick in consumer confidence this month,” GfK client strategy director Joe Staton said.
“Although the overall index score is still bumping along in negative territory, we’re seeing stronger positives in measures about how consumers view their personal financial situation – a key metric impacting day-to-day spending – coupled with a less negative view of the general financial situation across the UK in the coming year.
“With the government forecasting an economy showing modest growth, where inflation is under control, unemployment is at multi-decade lows and the employment rate is at a record level, perhaps this sunnier picture is to be expected?
“But before we see a leap back into the brighter positive numbers last seen in January 2016, consumers will need to be convinced in heart, head and wallet that Brexit’s murkiness has finally come to an end.
“And there are potentially dark clouds on the horizon with the next EU deadline of October 31st.”
Source: Retail Gazette