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Consumer Confidence Rises After Seven Straight Months Of Falls

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Consumer confidence increased in July 2022 according to the newest data from YouGov and the Centre for Economics and Business Research (CEBR). The 2.0 point rise in the overall index brings an end to a seven-month stretch of decline that began in December 2021.

Much of the index’s improvement can be explained by an uptick in household finance measures. July saw the arrival of the first government cost of living payments for low-income households, which may have contributed to retrospective scores improving from 55.1 to 60.3 (+5.3), and to outlook improving from 48.7 to 51.8 (+3.1).

Despite this boost, the overall public mood around household finances remains downbeat for both measures. Fieldwork for this study took place before the Bank of England announced that inflation was expected to hit 13% in 2022.

Business activity metrics also saw improvements: with scores for the past 30 days rising from 110.5 to 111.0 (+0.5) and outlook rising from 118.3 to 121.8 (+3.5), employees are slightly more likely to report that their workplaces are busier than they were last month – and more likely to expect them to get busier in future.

Perceptions of job security among UK workers inched up by 0.5 points from 93.3 to 93.7, but employees are more optimistic about the future, with the forward-looking metric moving from 119.6 to 120.9 (+1.3).

The only metric to see a decline in the index this month was the retrospective home value measure, which deteriorated by -0.5 points from 133.1 to 132.6. That said, homeowners are more optimistic than they were before after three months of worsening outlook: scores for this metric increased from 130.1 to 132.1 – an improvement of 2.0 points.

Kay Neufeld, Head of Forecasting at Cebr, said: “The first increase in the Consumer Confidence Index since November 2021 provides a welcome reprieve after a torrid string of declines saw sentiment plummet by more than nine points over the past seven months. Noticeably, the strongest upward momentum in July came from the backward and forward-looking household finance indicators.

Nevertheless, the increases in these measures are from an extremely low base and the outlook remains challenging. While the first cost-of-living payments have started to arrive, questions remain regarding the type of support households can expect over the coming months, with the energy price cap set to rise to new record highs in October and January next year.

Further headwinds will emerge as the UK economy is expected to teeter on the brink of recession in the second half of the year, suggesting the spike in consumer confidence may prove short-lived.”

Emma McInnes, Global Head of Financial Services at YouGov, said: “While this increase in Consumer Confidence is undoubtably positive news, there is a long road back to regain ground lost over the past seven months of decline. And, with the energy price cap rising in a few months alongside the UK economy heading towards a recession, there is every chance that this spike could be offset but a further long-term decline in the overall Index.”