UK households’ finance perceptions weakened to a six-month low in November as savings and earnings declined sharply, survey data from IHS Markit and Ipsos MORI showed on Monday.
The household finance index, which measures households’ overall perceptions of financial well-being, fell to 40.0 from 40.8 in October.
The decline signaled a more intense strain on the household finances amid a second lockdown in England and ongoing restrictions across the rest of the UK, IHS Markit said.
The outlook remained negative in November, with UK households on average expecting their financial situation to worsen in 12 months’ time, though the level of pessimism was the weakest since March, the survey added.
Households’ disposable income fell the most since May and at a sharp rate as suggested by cash availability and credit demand. As households dipped into savings to finance some purchases and compensate falling incomes, the level of savings dropped sharply at the quickest rate in seven years.
Further, the income from employment fell faster to its lowest level since July amid business activity declining in workplaces at the steepest rate in four months. The trend may have been partly driven by renewed use of furlough due to business closures in the hospitality and retail sectors, IHS Markit said.
That said, job perceptions recovered further from April’s survey low and households were the least pessimistic since March. But the index measuring job security remained noticeably below the 50 mark.
The extension of the furlough scheme to March 2021 appears to have helped to moderate the degree of job insecurity among UK households, IHS Markit said.
The survey also found that around a quarter of surveyed households foresee the next move by the Bank of England to be a rate cut at some time, despite the record low base rate at present.
“The latest data paint a worrying picture for household finances across the UK, with no sign yet of a recovery from the blow caused by the pandemic,” Lewis Cooper, economist at IHS Markit, said.
“The easing of lockdown measures will likely elevate some of the strain we saw in November, but until the economic recovery becomes more sustainable it is unlikely households will see much improvement in their financial situation.”
The material has been provided by InstaForex Company – www.instaforex.com
- Treasuries Move Higher Amid Uncertainty About Relief Package - January 22, 2021
- Oil Futures Settle Sharply Lower As Crude Inventories Rise - January 22, 2021
- *U.S. Crude Oil Inventories Increase 4.4 Million Barrels In Week Ended 1/15 - January 22, 2021