Squeeze on household budgets eases in May
The Index found that higher levels of income supported household budgets in May with marked rises among those working in Finance/Business Services and IT/Telecoms.
Manufacturing employees also saw a stronger pay growth than the UK-wide trend. In contrast Construction workers noted by far the most marked reduction in household income from employment.
Tim Moore, senior economist at Markit and author of the report, said: “May’s survey is a clear indication that the gloom is lifting over household finances.
“Budgets were under the least pressure for three years and rising workplace activity added to hopes in some quarters that their household finances may at last enter a period of relative calm.
“A renewed rise in take-home pay and lower inflation perceptions were the main factors boosting households’ financial sentiment in May.
“Alongside this, news that the UK economy avoided a triple-dip recession probably helped created a relief element to the rise in households’ financial perceptions.
“Meanwhile, there appeared a greater tendency towards saving rather than spending income gains in May, highlighting that households remain cautious about the underlying health of their finances.
“Looking ahead over the next 12 months, the latest survey indicates a wide gap between the relatively strong confidence of those with private sector services jobs and, on the other side, the downbeat expectations of construction, retail and public sector employees.”
The Index also found that inflation perceptions hit nine-month low as households reported that the squeeze on their cash availability eased substantially in May.