UK consumers less gloomy, but more reluctant to spend big
LONDON – Britain’s consumers turned a little less gloomy in January but there were signs that they might be starting to scale back on spending as last year’s Brexit vote pushes up inflation, a survey published on Tuesday showed.
Market research company GfK’s monthly consumer sentiment index edged up to -5 in January from -7 in December, higher than a median forecast of -8 in a Reuters poll of economists.
But a fall in the GfK’s measure of the appetite for major purchases among consumers – which slipped to 10 from 12 in December – could be a foretaste of slower consumer spending this year, Joe Staton, head of market dynamics at GfK, said.
In December, GfK measured a big jump in households’ willingness to make major purchases. The Bank of England has said consumers might have brought forward big purchases in anticipation of price rises in 2017.
“Rising inflation and weak income growth is forecast to squeeze households’ disposable income, and these two factors could conspire to depress confidence for the year ahead,” Staton said on Tuesday.
“It’s certainly difficult to see where the oomph will come from over the short term.”
Britain’s economy grew more strongly than its rich country peers last year, confounding forecasts from the Bank of England and almost all private economists that the referendum decision to leave the European Union would quickly hit growth.
BoE officials have said they now expect Britain is heading into a “slow-motion” slowdown with inflation on course to rise above its 2 percent target in the coming months, eating into the spending power of consumers.
GfK said its survey showed households remained their most pessimistic about the economy over the 12 months ahead since just after the Brexit vote in June.
Separately on Tuesday, Adzuna, a jobs search engine, said the number of advertised vacancies fell by nearly 5 percent in December from November after rising for the previous three months.
Adzuna also said the average advertised salary rose by a monthly 0.3 percent to 32,323 pounds but was down 3 percent compared with December 2015. So far, Britain’s labour market has shown no major sign of weakening since the referendum, according to official data. -Reuters