Following the Royal Wedding, UK consumers are still negative, but feeling better than at any point in 2011
Bloomberg//YouGov Household Economic Activity Tracker (HEAT) reports that consumers are still worried, but their outlook is improving; has the Royal Wedding been the catalyst for a return to consumer optimism?
- Future outlook still negative, but better than March
- Positive outlook among workers about next year’s business activity
- Inflation still a worry for consumers, as over 80% expect prices to rise
- Homeowners showing a positive outlook for the first time since last summer , as more expect their home values to increase over the next year than decrease
'Times remain challenging,' said Stephan Shakespeare, CEO of YouGov, 'but, we are seeing optimism in the UK reaching its highest level in 2011. With April seeing the warmest weather on record, two four day weekends and a Royal Wedding, this may be a turning point in consumer confidence. We will be watching keenly for the first signs that this positive trend continues in our results for May.'
After reaching all-time lows in March, consumer confidence edged up to -24 (versus -36 last month) as GDP measures indicate a very slight improvement in the health of the country’s economy (Figure 1). While 40% of consumers expect their financial situations to get worse over the next year, this is down from 52% last month. This optimism manifests itself in sentiment about the country’s overall economy. While more consumers expect a depression in the next 12 months than an economic boom (21% vs. 4%), fewer consumers were expecting a depression than in March (27%, in a separate survey).
Turning to the workplace, confidence in job security follows a similar trend of improvement which supports the recent fall in official unemployment figures. Worries about unemployment are still high, but lessening as 23% of Britons said in April they expected unemployment to increase "a lot" during the next 12 months versus 33% in March. Individuals remained worried about their own job, with 22% saying they feel less secure in their job than a month ago (vs. 24% in March). Expectations of their own unemployment have remained stable as only 5% say they are "very likely" to be laid-off in the next 12 months (same as March).
Thinking specifically about their own company and place of employment, more workers saw business activity pick up (23%) than decline (18%). Furthermore, workers are optimistic with 28% expecting business to improve over the next 12 months vs. 15% expecting a decline. This compares favorably to last month, where 25% expected improvement versus 17% expecting a decline.
Inflation expectations remain extremely high, with over 80% of Britons saying they expect £100 to buy less this year than next year and 31% expecting it will buy significantly less in 12 months. Over half of Britons, 52%, report they are more price-sensitive when shopping than they were a year ago. Consumers expect the rate of inflation to increase 4.7% over the next year versus 4.2% they believe to be the current inflation rate.
Home owner attitudes are perking up slightly. More home owners expect their home's value to increase (26%) in the next year than decrease (19%). This +7 net score represents a shift compared to March, which had a net score of -14 (36% of homeowners expecting value to decline vs. 22% expecting an increase). Optimism, though, is tempered among home owners expecting the value of their homes to increase as 74% of those projecting home price increases expect them to be 4% or less.
