UK consumer confidence drops again says GfK

By

Sandra Halliday

Published
Oct 31, 2017

UK consumer confidence dropped in October with a one point fall. That may not seem like much but with confidence already low, it drove the overall measure down further to -10.

There was some good news in the latest report from GfK, as it saw the Major Purchase Index increasing ever-so-slightly along with the Personal Financial Situation index, but overall the outlook was bleak.

Let’s look at the details. For a start, two of the five measures declined, two increased and one stayed level. The Overall Index Score of -10 is actually well below the -3 of a year ago, although it matches the figure of August this year.

The measure for the Personal Financial Situation over the last 12 months rose by one point to a level of zero, but that’s hardly news to get excited about. And it’s also below the +3 of a year ago. And the Personal Financial Situation over the next 12 months measure was flat at +4, lower than October 2016’s +6.

The General Economic Situation over the last 12 months measure dropped one point to a worrying -29 from -19 a year ago, while the General Economic Situation over the next 12 months was down two points to -29 from -17 in the year-ago period.

And the Major Purchase Index rose two points to +3, which may be positive but is down from +14 this time last year.
Joe Staton, Head of Market Dynamics at GfK, said it’s no surprise that the Overall Index Score continued to bump along in negative territory this month. “As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real ‘get-up-and-go’,” he said. “The tiny shift up a point in how we view our personal finances over the past year is counter-intuitive given rising living costs, an imminent interest rate rise, and the reality that we earn less in real terms in 2017 than in early 2006.”

Interestingly, he also said that consumer enthusiasm for spending, as witnessed by the uptick in the Major Purchase Index, “is more worrying than reassuring.” He’s concerned that credit card use is fuelling spending at the expense of an appetite for saving, which is growing at the slowest rate since the start of the 2008/09 financial crisis. 

“We are now entering the crucial Christmas trading season and it will be a testing time for retailers and consumers alike.” Staton said. “Will consumers carry-on shopping or start to cut-back in the face of mounting pressure on our pockets?”