Lloyds Bank: Confidence in economy sustained
This easing in confidence comes against a backdrop of very modest wage growth, despite continued gains in employment and an economic recovery in progress.
The most acute pressure for consumers continues to be gas and electricity spending, where spending growth remains high at around 8% on a year ago, with gas and electricity prices being a source of inflation concern for 79% of respondents.
But growth in average overall spending eased further to around 2% on a year ago in October, as spending growth fell back most notably on food and fuel.
In line with this, while fuel prices are a source of inflation concern for 60% of respondents, this is the lowest since the beginning of the survey.
Patrick Foley, chief economist at Lloyds Bank, said: “After a sustained run of stronger confidence readings, the pace of improvement in sentiment has eased back a little. But with the economic backdrop firming as the UK recovery takes hold, and essential spending growth easing back, looking ahead we are likely to see consumers better placed to undertake discretionary spending, and so to further support the economic recovery.”
Consumer sentiment towards the current financial situation is most negative in North England and the Midlands, with 82% stating it is ‘not good’ or ‘not good at all’ compared to 74% in South England.
The net balance of consumers with a positive view of thehousing market has returned to levels seen in August. The number of those that say the current housing market is ‘excellent’ ‘very good’ or ‘somewhat good’ is stable at last month’s peak of 41%, compared to 39% in August and 34% in July, but those who believe it is ‘not good at all’ has crept back up to 16% from 13% in September. Those in Northern Ireland have the most negative view of the housing market, with 69% stating it is ‘not good’ or ‘not good at all’ compared to the national average of 58%.
While still high, negative feelings towards theemployment market continue their slight downward trend, with 77% of respondents saying that it is ‘not good’ or ‘not good at all’. This compares to 78% last month, and 81% in August. 55-64 year olds hold the most pessimistic view with 86% saying it is ‘not good’ or ‘not good at all’, a slight decline from 87% last month
Fears around increases in prices of utilities continue to be on the rise. Those indicating gas and electricity prices as a reason for inflation concerns increased further to 79%, with a slight increase of two percent from last month, while those indicating food prices, while still high, remain broadly stable at 74%, down one percent from last month. But concerns around fuel prices as a source of inflation concern fell back to 60% from its peak seen in March of 68%, the lowest in the survey to date.
Additionally, those in East and West Midlands, Wales and Northern Ireland have the highest concerns of inflation on petrol prices at 67%, 67% and 71% respectively, whereas those living in Greater London worry the most about the impact inflation will have on the cost of buses, trains and other public transport at 42%.
Consumers’ sentiment towards their ownpersonal finances continues to remain a concern with 48% of respondents still saying they are ‘not good’ or ‘not good at all’, an increase from 46% last month. 45-54 year olds once again have the most negative view of their personal finances, with 54% continuing to say they are ‘not good’ or ‘not good at all’. Those living in Greater London have the most positive view, with 17% saying that it is ‘very good’ or ‘excellent’, compared to 6% in Northern Ireland and 7% in Wales and West England.
The balance of opinion between those who feel they will have a more money in the future versus less money to spend after household bills and essentials have been paid fell from last month’s positive sentiment of 1% to -5%, the same levels last recorded in July. 18-24 year olds have the highest positive balance with 20%, while Greater London is the most positive region at 10%.
The balance of opinion between those that feel they are able to save more money in the future versus much less also decreases slightly in October but remains a positive balance at 4%, lower than the 7% high of last month. The most optimistic about the future levels of saving continues to be those between 18-34 year olds with a positive balance of 38%, while the most pessimistic are 55-64 year olds, with a negative balance of -19%.
Additionally, those that feel they are able to pay off their debt in the future falls slightly this month, with the balance of opinion between those who feel they will be able to pay off much more of their debt versus much less standing at 5% down from 7% in September.
Philip Robinson, Personal Current Accounts Director at Lloyds Bank, says: “With consumer sentiment remaining at an all time survey high, we believe this will bolster consumer spending and help to strengthen the wider economic recovery. We understand that customers have a choice about where they bank and as the economic outlook strengthens, we will continue to reward customers with a range of account offerings to help their money go further.”
Philip Robinson, Personal Current Accounts Director at Lloyds Bank, said: “With consumer sentiment remaining at an all time survey high, we believe this will bolster consumer spending and help to strengthen the wider economic recovery. We understand that customers have a choice about where they bank and as the economic outlook strengthens, we will continue to reward customers with a range of account offerings to make their money go further.”