July UK Consumer Confidence Index: The pain is real
Head of Macro Analysis
Summary: The GfK consumer confidence index in the United Kingdom casts doubt on V-shaped recovery. In July, it remains in depressed territory, at minus 27 versus prior at minus 30 in June and expected at minus 26. The only bright spot is the pickup in personal financial situation over the next twelve months, which is mostly due to higher saving rate.
This is another disappointing headline for the United Kingdom. This morning, GfK reported that its composite index of consumer’s confidence, which dates back to 1974, improved slightly less than expected at minus 27 vs consensus at minus 26 in July. Though it has increased by nine points since the end of May, the index is still way below its pre-crisis level, when it was standing at minus 9. Looking into details, the climate for major purchases is a little bit better, at minus 27 vs minus 32 in June. It seems that the reopening of entertainment venues did not boosted as much as expected the public’s mood and propensity to consume. The only real bright spot is the pickup in personal financial situation over the next twelve months. It is back to zero, which is only three points below its pre-crisis level, as a consequence of higher saving rate in the lockdown and post-lockdown periods. The willingness-to-save gauge is at 21, which is the highest level since October 2019. However, in order to have a sustained rebound in growth of consumer’s spending in the coming quarters, the savings rate has to stop climbing, which is highly uncertain at this stage. We fear that the acceleration in job losses coupled with the end of the furlough scheme will continue to depress consumers’ spending in the short- and medium-term. On top of it, Brexit deadlock might also weight negatively on confidence, at least until the very end of the year, when we expect a last minute agreement will signed between the UK and the EU on future trade relations.
Latest Market Insights
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.