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UK consumers choose spending over saving as confidence rises
[LONDON] UK consumers seem to have cash burning holes in their pockets and are showing some eagerness to spend - after an initial post-Brexit wobble.
GfK said its household confidence index jumped 5 points to minus 7 in August, regaining almost half the ground lost the previous month. A measure of how willing consumers are to make major purchases also improved after slipping in July, as did expectations for their personal finances.
The report is the second in less than a week to show consumers are recovering from the initial shock of the vote in June to leave the European Union. Retail sales rose a strong 1.4 per cent in July, and GfK said its measure of savings dropped to the lowest since 2013.
"We Brits are clearly determined to carry on shopping for today rather than saving for tomorrow," said Joe Staton, head of market dynamics at GfK.
The results indicate "some recovery" as "consumers settle into the new wait-and-see reality of a post- Brexit, pre-exit UK"
Signs of consumer strength are in contrast to a more mixed picture among executives. Lloyds Bank said its business barometer fell 13 points to 16 in August, and firms were the most sombre about trading possibilities since December 2011. The headline index remains above its post-referendum low of just 6.
For consumers, sentiment has been partly supported by an improvement in real wage growth and a rise in disposable household income. A survey by supermarket chain Asda showed family spending power - after taxes and essential spending - rose 5.4 per cent to £202 (S$360) per week in July from a year earlier.
Still, it said the pace of improvement was the slowest since October 2014 and noted that weaker wage growth and faster inflation may put pressure on family budgets.