Mixed picture on consumer confidence amid contrasting data

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March consumer confidence

The UK retail industry has been provided a mixed picture on overall consumer confidence, with one index showing it grew to the best level in almost a year while another indicated that declined for the first time since November.

According to the long-running GfK Consumer Confidence Index, overall sentiment climbed three points to -7 this month – the best it has been since April last year, when it was also at -7.

While it was still in negative territory, GfK said the growth in confidence was down to economic growth and prospects of wage increases.

GfK March consumer confidence

“Despite the ‘Beast from the East’ leaving the nation shivering under a blanket of snow, stoic UK consumers turned faintly bullish this March,” GfK head of experience innovation Joe Staton said.

He added: “The prospect of wage rises finally outstripping declining inflation, high levels of employment with low-level interest rates, and finally some movement on the Brexit front, appear to have boosted our spirits.”

GfK’s data also indicated that shoppers’ sentiment over their personal financial situation over the past 12 months improved by three points to +3, one point higher than this time last year.

For the year ahead, the forecast for personal finances increased five points to +10, seven points higher than March 2017.

The measure for the general economic situation of the country during the last 12 months has increased three points to -26, although this is five points lower than this time last year.

Expectations for the general economic situation over the next 12 months have increased four points to -22, also lower than this time last year by two points.

On the other hand, GfK’s major purchase index has increased two points this month to +2, four points lower than March 2017, while the savings index increased one point to +13 in March, 14 points higher year-on-year.

“It’s still a little early to be talking about green-shoots, and the core score is of course still negative, but this is definitely a movement in the right direction,” Staton said.

“Consumers are feeling a tiny spring in their step – let’s see next month if April showers dampen the mood.”

Meanwhile, data from the YouGov and the Centre for Economics and Business Research (Cebr) found that shoppers’ sentiment declined for the first time in four months.

Its Consumer Confidence Index shows stood at 107.7 this month – down from 108.7 in February.

YouGov/Cebr said this was -0.2 points lower than the average score over the last 12 months.

YouGov/Cebr March consumer confidenceSimilar to GfK’s data, YouGov/Cebr measure household finances, property prices, job security and business activity, both over the past 30 days and looking ahead to the next 12 months.

It found that while three metrics improved in March, five declined.

Both backward and forward-looking household finances measures rose, but other areas saw falls.

Although February saw job security reach a two-and-a-half-year high, both experienced and anticipated job security levels dropped in March.

Additionally, in a month that saw not only adverse weather but also a number of high-profile retail profit warnings and closures, confidence in business activity also declined across both measures.

“After three consecutive increases, it is worrisome that the March consumer confidence figure has declined,” Cebr head of macroeconomics Nina Skero said.

“With the forward and backward looking measures of business activity and job security all ticking down, questions concerning a pending labour market downturn will resurface.

“There is, however, a silver lining. As wage growth begins to overtake inflation, consumers are reporting improving household finances.”

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