CEBR: August sees upturn in consumer confidence

John Hewitt Jones

August 26, 2016

Consumer Confidence increased in August, according to the Consumer Confidence Index published by YouGov and the Centre for Economics and Business Research.

The research, published two months after the UK voted to leave the European Union, shows consumer confidence has improved to 109.8 points, up from 106.6 points in July.  This is the highest monthly jump since February 2013 when it rose by 3.5 points after the UK economy performed stronger than expected.

August’s rise in consumer confidence follows a sharp fall in July in the month following the EU referendum. However, despite the strong improvement during the past month the index has only recovered around half of the ground it lost in the wake of the referendum.

YouGov’s data shows the areas with the biggest increases in August are those looking ahead to the next 12 months, particularly in expected household financial situation, property prices, and levels of business activity at work. Only one has fallen slightly in the last month – job security in the year ahead.

Scott Corfe, director at the Centre for Economics and Business Research, said: “This month’s improvement in consumer confidence follows positive news from other areas of the economy and slightly punctures the arguments of those who predicted immediate economic Armageddon following a Brexit vote.

“With consumer confidence rising and year-on-year retail sales up it is evident that the public have yet to feel many – if any – effects from the vote to leave the EU.

“Both inflation and unemployment are low, for now, which is undoubtedly supporting consumer optimism. However, this could easily change next year as the weakness of sterling pushes up the cost of imports. 2017 could be the year that consumers stumble.”

The poll was measured by collecting information from around 6,000 consumer interviews undertaken each month. Respondents are asked about their household financial situations, property prices, job security and business activity in the workplace, both looking back over the past 30 days and ahead to the next 12 months.

All four measures looking back over the past 30 days have improved – household financial situation, property value, job security and business activity in the workplace.

Stephen Harmston, head of YouGov reports, added: “For all the talk of doom and gloom – both in the months leading up to the referendum and in the days following it – most consumers have yet to feel much tangible impact of the vote to leave the EU.

“It is clear that the panic that gripped the public in the immediate aftermath of the referendum has subsided as institutions like the Bank of England take decisive action and the result becomes a part of life. Of course, everything could change once details of the deal to leave the EU emerge and the process of extracting ourselves from the Union become a reality.”

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