Consumer confidence edges up, but caution remains

• Deloitte’s UK consumer confidence index in Q1 rose one-percentage-point, to -8%, driven by greater optimism about incomes;
• Spending on essentials remained flat, but discretionary spending fell sharply;
• Sentiment in job opportunities and career progression edged lower by two-percentage-points, to -5%;
• The Deloitte Consumer Tracker measures UK consumer confidence on a quarterly basis.

UK consumer confidence saw modest quarterly growth of one-percentage-point (to -8%) in the first quarter of the year, according to the latest Deloitte Consumer Tracker. However, confidence is down by two-percentage-points compared to the same time last year.

The analysis, based on the response of over 3,000 consumers in the UK between 23 and 26 March 2019, reflected how more positive economic news has helped boost confidence particularly with regards to levels of disposable income and job security, with these measures up five- and one-percentage-point, respectively.

By contrast, a two-percentage-point fall in sentiment relating job opportunity and career progression highlights continued concern about possible weakening of the job market. This is reflected by recent Deloitte research, which found that 53% of CFOs also expect to reduce hiring due to Brexit – the highest level in more than two years.

Ian Stewart, chief economist at Deloitte, commented: “The bounce in consumer sentiment comes against a backdrop of heightened uncertainty around Brexit during the survey period in late March. Consumers also faced headwinds from a slowing global economy while at home housing activity has softened and consumer credit is less easy to come by.

“Despite the deluge of bad news consumer confidence has held up, fuelled by rising real incomes, a buoyant jobs market and ultra-low mortgage costs. Earnings growth has now outstripped inflation for 13 consecutive months while unemployment is at its lowest level since 1975. Mortgage rates remain close to all-time lows.

“The key question for the UK consumer is whether growing corporate nervousness will trigger a squeeze on pay and jobs in the second half of the year.”

A notable drop in discretionary spending this quarter was partly due to the seasonal effect of Christmas.

Ben Perkins, head of consumer research, commented: “The uplift in consumer confidence fits with the rebound in retail sales in March. Yet Brexit remains on the horizon and only when this uncertainty lifts will we be able to judge the underlying strength of the consumer market. Meanwhile, consumers continue to rebuild their finances, reflected in a slowdown in borrowing and an increase in savings.”

End

Note to editors

About the research
The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on Deloitte’s behalf. This survey was conducted online with a nationally representative sample of over 3,000 UK adults aged 18+ between 23 and 26 March 2019. Overall consumer confidence is calculated as an aggregate of six individual measures: job security, job opportunities, household disposable income, level of debt, children’s education and welfare, and general health and wellbeing.

About Deloitte
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk

Member of Deloitte Touche Tohmatsu Limited