The household finance index, measuring households’ financial outlook, picked up in November but failed to recover fully from October’s 10-month low.
At 41.8 in November up from 37.4, the index was the second lowest since May and was still well below the 44.3 reading seen during September.
Tim Moore, Senior economist at Markit and author of the report said: “November’s survey highlights that the alleviation of strains on household finances has continued as winter approaches. A reduced squeeze on cash availability helped to stabilise debt levels while pressures on savings were the lowest in two-and-a-half years. However expectations for the year ahead remain subdued as the dismal global economic backdrop means the recent easing in financial pressures is more a cause for relief than celebration.
The reduced squeeze on financial wellbeing in November partly reflected lower inflation perceptions compared to October which in turn resulted in weaker pressures on savings and cash availability.
However there was little support from the trend in income from employment which continued to fall slightly and at a marginally faster pace than in the previous month.
Meanwhile job insecurities persisted in November and households’ appetite for major purchases fell from the previous month.
People renting from private landlords saw a particularly sharp drop in their propensity for big-ticket spending in November and respondents in this housing category also bucked the wider trend of a lesser squeeze on financial wellbeing.
In response to questions on future finances around 40% of households expected their household finances to worsen over the year-ahead while only 23% anticipated an improvement.
In line with recent trends people working in the public sector were much more downbeat about their financial outlook than those in the private sector.
Of those surveyed 45% anticipated a deterioration in the public sector compared to 35% in the private sector category.
November data signalled that the squeeze on cash availability moderated for a third month running with the latest decline the slowest since December 2010. That helped alleviate pressure on household savings in November which dropped at the slowest pace for two-and-a-half years.
Debt levels were meanwhile broadly unchanged in November with declines largely confined to the highest income category. In this group three times as many respondents paid down debt as those that saw an increase.
Households signalled that their need for unsecured credit continued to rise in November but the rate of growth was unchanged on the month and therefore still lower than at any time since March 2011.
Moore added: “The surprise uptick in consumer price inflation during October alongside muted trends in employee earnings suggests that the recent moderation in financial strains may prove somewhat transitory.
“Indeed it may have already started to fray at the edges since the gradual easing of financial pressure was uneven across the housing categories monitored in November.
“In particular tenants in the private rental sector signalled a deepening deterioration in their financial wellbeing over the month likely a reflection of higher rental costs among those unwilling or unable to get on the property ladder.”