UK Households Confidence Over Financial Condition Climbs in September: IHS Markit

UK households confidence about their financial condition reached to its top since 2015 in September supported by continued growth in employment, ease of concerns over inflation, said a survey on Monday (17).

The headline seasonally adjusted IHS Markit Household Finance Index (HFI) which measures households’ overall perceptions of financial well-being recorded 45.9 points in September, thereby matching the reading observed in August, which was the second-highest since the survey began in February 2009.

Household finance index of 45.9 is just below the January 2015 survey record high of 46.2.

Latest survey data once again pointed to a relatively soft squeeze on UK household budgets.

Household finances were boosted by improved earnings from employment and favourable labour market conditions. Although households perceive current living costs to be rising markedly, inflation expectations softened to a 21 month low in September.

With sentiment towards current finances generally improving over the month, UK households’outlook regarding future budgets strengthened in September. In fact, financial wellbeing expectations, albeit still negative overall, were the second strongest since the August 2016.

Income from employment increased in September, with the respective index holding close to August’s survey-record high.

Job security perceptions weakened in September, in contrast to the generally upbeat signal from the current and future household finance assessments. Latest survey data indicated the highest degree of uncertainty towards job security for seven months. People working in the manufacturing and retail sectors were particularly downbeat in September.

“...Nonetheless, the latest survey still raised some concerns about the outlook for consumer spending. The degree of uncertainty towards job security edged up to a seven-month high. Survey data suggests households working in the manufacturing sector were the most concerned about their employment prospects, likely reflective of the current ambiguity towards future customs arrangements with the EU,” said Joe Hayes, Economist at IHS Markit, sharing his views on the latest data.

In line with the trend since the autumn of 2016, living costs were perceived to have risen strongly over the month. Expectations of further inflation were sustained in September; however, the proportion of households anticipating rising living costs is the lowest since November 2016.