NEWS26 October 2020

Consumer confidence falls to six-month low

Covid-19 Financials News Trends UK

UK – Consumer confidence in the UK has fallen for the first time in six months due to the recent increase in Covid-19 restrictions in the UK, according to YouGov and Centre for Economics and Business Research (CEBR) analysis.

The consumer confidence index for October found that consumer confidence was at 101.3, which was a fall of 1.1 points from September and ended five months of increases.

Any score above 100 indicates consumers are more confident than not, with scores below 100 indicating a negative score. The data is based on 6,000 interviews a month featuring questions on respondents’ feelings about their household finances, property prices, job security and business’ or workplace’s activity both over the past 30 days and the next 12 months.

Of the eight metrics covered in the research, four of them fell in October. The biggest fall was confidence in household finances over the next year, which the research found had dropped 5.6 points to a total score of 86.

Households were asked how they thought their finances would change a year from now, and this month’s dip in confidence is the steepest since March, when there was a 16.5 point drop.

More households said their finances had worsened over the past month, according to the analysis, with the research finding confidence fell one point in October to an overall score of 90.6.

The analysis also found increasing pessimism over the housing market, with a 3.9 point fall in confidence among respondents that their home’s value had been maintained over the past 30 days, giving a total score of 104.1.

Confidence in their home retaining its value over the next 12 months also fell among respondents, with a total score of 108.8 and a decline of 2.3 points. YouGov said that the changes could indicate that the housing market was beginning to run out of steam. 

Despite the overall fall in confidence, there were increases in optimism about job security. Confidence about job security over the next year was up 0.7 points to 112, and while respondents rated their job security over the past month at 87.7 overall, this was an increase of two points on September’s score.

Employees were also still comparatively positive about business activity at their company over the previous month and for the year ahead, with a 0.1 point and one point increase respectively. Confidence in business activity over the past 30 days was at 104.5 overall, and at 116.8 for the next 12 months.

Additional research from YouGov and CEBR found that only 16% of respondents expected the economy to grow in the next year, while 83% believed it would contract.

Darren Yaxley, director of reputation research at YouGov, said: “This month’s consumer confidence index brings an end to the steady increase in confidence following the initial downturn through February and March.

“While there were improvements in confidence for businesses activity and job security, these increases are nominal and more than eight in ten actually expect the economy to contract next year. As we enter the winter months, the picture will become clearer as to whether this was just a blip or the start of something more serious.”

Kay Neufeld, head of macroeconomics at the CEBR, said: “The first fall in the consumer confidence index in six months may prove to be a turning point in consumer sentiment as the reality of a second wave sets in.

“Many businesses that have just about managed to stay afloat are threatened by the new lockdown restrictions, while at the same time government stimulus is scaled back. Consumers clearly see this as a negative for the outlook of their household finances.”

0 Comments