Joe Staton, Client Strategy Director at GfK, says:
“With all measures falling across the board this month, we revert to the Overall Index Score of -13 that we saw four times already this year. Perhaps scores clustered around -13 are to be the ‘New Normal’ for consumer confidence?
"While UK consumers continue to remain concerned about the wider economy, over which the woman or man in the street has no control, of greater worry are the falls in the measures for personal finance. These better reflect our hopes and fears for our everyday financial futures and this, coupled with a decline in the Major Purchase Index, could point to a turbulent time for the economy over the summer months.
"Another trend to watch, even though it’s not included in the Overall Index Score, is the Savings Index – up for the third month in a row at +19. Despite more of us agreeing that “now is a good time to save”, the official savings ratio (the percentage of disposable income being saved) stands at near historic lows as households must either dip into their savings or go into debt to fund the cost of day-to-day living.
"This is important because, without the security of a savings buffer, consumers may well be unable to absorb the impact of any downturn a no-deal Brexit might deliver.”
The Overall Index Score in June 2019 is -13; all five measures decreased in June.
The index measuring changes in personal finances during the last 12 months has decreased by four points this month to -1; this is now one point lower than in June 2018.
The forecast for personal finances over the next 12 months decreased by three points to +2 this month; this is four points lower than in June 2018.
The measure for the general economic situation of the country during the last 12 months has decreased this month to -32; this is four points lower than in June 2018.
Expectations for the general economic situation over the next 12 months have decreased four points to -33; this is eight points lower than June 2018.
The major purchase index decreased three points in June 2019 to -2; this is two points lower than in June 2018.
The savings index has increased three points in June to +19; this is 11 points higher than at this time last year.
· The UK Consumer Confidence Barometer is conducted by GfK on behalf of the EU, with similar surveys being conducted in each European country. In producing its own reports on the whole of Europe, the EU applies a seasonal adjustment to the data, to smooth out any changes that are functions, at least in part, of the time of year.
· Historically, the UK data have not been seasonally adjusted in this way, and to maintain comparability, GfK continues not to apply this adjustment. This can lead to situations where the EU figures show different movements in a particular month from those produced by GfK. Individual months may be affected, but the long-term trend is not.
· The UK Consumer Confidence Survey from GfK was conducted among a sample of 2,001 individuals aged 16+ on behalf of the European Commission.
· Quotas are imposed on age, sex, region and social class to ensure the final sample is representative of the UK population.
· Interviewing was carried out during 3rd – 14th June 2019.
· The figures contained within the Consumer Confidence Barometer have an estimated margin of error of +/-2%.
· Results for the Consumer Confidence Barometer are normally available on the last working day of each month at 00.01am (unless the final working day of a month is a Monday, in which case the results are published on the Friday preceding the final working day). The release date for July is Wednesday 31st July 2019.
· Any published material requires a reference to both GfK and the European Commission e.g. ‘Research carried out by GfK on behalf of the European Commission’.
· This study has been running since 1974. Back data is available from 1996.
· The table below provides an overview of the questions asked to obtain the individual index measures:
Personal Financial Situation
This index is based on the following questions to consumers: ‘How has the financial situation of your household changed over the last 12 months?’
‘How do you expect the financial position of your household to change over the next 12 months?’ (a lot better – a little better – stay(ed) the same – a little worse – a lot worse)
General Economic Situation
This index is based on the following questions to consumers: ‘How do you think the general economic situation in this country has changed over the last 12 months?’
‘How do you expect the general economic situation in this country to develop over the next 12 months?’
(a lot better – a little better – stay(ed) the same – a little worse - a lot worse)
Major Purchase Index
This index is based on the following question to consumers: ‘In view of the general economic situation, do you think now is the right time for people to make major purchases such as furniture or electrical goods?’
(right time – neither right nor wrong time – wrong time)
This index is based on the following question to consumers: ‘In view of the general economic situation do you think now is?’ (a very good time to save – a fairly good time to save – not a good time to save – a very bad time to save)
(Commented on but not included in the Index Score)