UK consumer confidence is shaky but stable says latest GfK report

By

Sandra Halliday

Published
Mar 31, 2017

UK consumer confidence continued in negative territory in March with GfK’s long-running monthly survey sticking at a reading of minus six. That reading was not as bad as last July, in the wake of the Brexit vote, nor of last November, but it still suggested weak consumer sentiment that’s bad news for anyone selling discretionary items.

However, the reading still leaves analysts unclear as to just how much consumer sentiment will be reflected in lower (or higher) spending the tills. This lack of clarity was underscored by the fact that while three of GfK’s five measures stayed level, two rose, suggesting improved sentiment in those areas.

So exactly what were the figures? The index measuring changes in personal finances during the last 12 months rose from a reading of one in February to two in March, which actually suggested slightly more optimism. But that was down on the reading of four in March last year.

And the fact that the index for personal finances in the next six months was only plus three, six points lower than a year ago, also underlined the fragile spending environment for retailers at the moment.

GfK’s major purchase index took the confusion further. At plus six and one point higher than in February it looked quite buoyant. But it was actually down five points on March 2016.

The measure for the general economic situation of the country during the last 12 months stayed at the same level as February, minus 21, which is 11 points lower than March 2016. And expectations for the general economic situation over the 12 months ahead stayed at minus 20, eight points lower than March 2016.

The savings index, which isn’t one of the main five measures but is always included in the report, increased three points month-on-month to minus one and is one point up year-on-year. That suggested increased consumer caution and a willingness to save money for a rainy day rather than going out and buy new season fashion.

Joe Staton, Head of Market Dynamics at GfK, said there were “no real upsets this month as the Barometer continues to bump along in negative territory.”

But he added that “consumers remain cagey about the state of their personal finances and the general economic picture for the UK, especially as wage growth fails to keep pace with the rising costs of living.”

Yet he believes it is too early to call whether consumers will rein-in spending significantly. He said: “Since the Brexit referendum, household spending has been a big driver of growth, so any slump will dent future economic prospects. However, if we carry on shopping, as seen by the uptick in the Major Purchase Index, then forecasts for a post-Trigger/pre-Brexit slowdown could be proved wrong.”