Household finances worsened and confidence in prosperity prospects dived at their sharpest pace since the summer in November, confirming the ongoing squeeze facing consumers.
The Markit Household Finance Index dropped from 35.0 in October to 34.6 this month, where any figure below 50.0 indicates worsening finances.
The survey average since it began in February 2009 is 37.6.
A little more than a third of respondents said their financial situation had deteriorated since October, only 6 per cent seeing any improvement.
Tough time: Many more people felt worse off than those who felt any richer
The outlook appears bleaker for those on lower incomes, with a widening disparity between those on higher pay levels.
In the lowest group (less than £15,000 a year) just over half felt poorer in November, and in the second-lowest income bracket 45 per cent felt the same.But in the wealthiest group just 19 per cent noted finances deteriorating, while nearly as many - 14 per cent - felt richer.
More public sector workers felt worse off (32.9 on Markit's scale) than those in the private sector (38.6), and public sector employees are more pessimistic about the year ahead (55 per cent expecting deterioration) than their private sector counterparts (45 per cent). Overall, nearly half of respondents (48 per cent) expect their financial situation will worsen in twelve months' time against a quarter who think it will improve.
Tim Moore, Markit senior economist, said: 'While all eyes are on whether the UK economy will double-dip, the latest survey is a timely reminder that the household recession hasn’t even paused for breath.
'Measures of households’ cash available to spend and their willingness to make major purchases were both even worse than at the peak of the recession.'
It was 18-25 year-olds who saw the steepest rise in debt levels of all age categories, while they reported the fastest falls in both their savings and willingness to spend since the survey began almost three years ago.
'Scratching below the surface illuminates uneven strains across household income categories,' Moore added. 'Most starkly, the overall figures mask the survey’s widest ever divergence between the financial situation of the top and bottom income groups.
'As might be expected following the recent surge in youth unemployment, respondents in the lowest age group saw a particularly sharp deterioration in their finances.'
Households' willingness-to-spend on major purchases remained close to the record low after January's VAT rise, with 49 per cent less keen to splash out. And three times as many people (32 per cent) reported a drop in household savings compared with 10 per cent seeing an increase.
Adding to concerns over the prospects for Christmas shopping the British Retail Consortium reported today that shopper footfall fell 2.3% year-on-year between August and October. October itself saw the sharpest year-on-year drop in footfall so far in 2011. Further worrying news came from John Lewis revealing that their department store sales were down by 3.2% down year-on-year in the week’s trading to 19 November.
Howard Archer of IHS Global Insight said: 'Ongoing turmoil in financial markets and heightened fears over global as well as domestic growth prospects is unlikely to do much for consumers’ confidence and willingness to spend.
'The only really good news for consumers at the moment is that it is very clear that the Bank of England is not going to raise interest rates for some considerable time - We do not expect a move before mid-2013 - [but then] net savers suffer.
'On a longer-term basis, October’s dip in consumer price inflation (to 5.0% from 5.2%) should mark the start of a substantial downward trend that will increasingly ease the squeeze on households’ finances. Even with CPI falling back markedly though, the overall environment will still be very tough given likely further significant rises in unemployment, ongoing muted wage growth and continuing tight fiscal policy.'
By The Mail Online
No comments:
Post a Comment