Consumer confidence jumped to its strongest level in six months in September, according to a long-running survey published today, as separate data reveals growth in retail sales and business optimism.
The index of confidence collated by Yougov and the Centre for Economics and Business Research (CEBR) rose to a reading of 108.6 points for September, based on a survey of more than 6,000 Britons. That represented the highest reading since March when the index hit 109.5. Any reading above 100 means more consumers are confident than pessimistic.
However, the levels still remain below those seen before the Brexit vote last June.
The index’s evidence of strengthening consumer confidence was echoed by the Confederation of British Industry’s (CBI) retail figures for September, published yesterday, which showed sales growing at their fastest pace for two years.
A balance of 42 per cent of the 55 big UK retailers surveyed said sales had improved in the year to September, the strongest reading since September 2015.
The CBI survey supports the view that consumer spending growth has picked up some pace in the third quarter after a weaker first half, according to Paul Hollingsworth, UK economist at Capital Economics.
Anna Leach, the CBI’s head of economic intelligence, said the figures showed “some vigour returning to the retail sector”.
Confidence measures across the economy weakened over the summer after the Conservative party's decision to call a snap General Election left Prime Minister Theresa May short of a majority in Parliament.
However, in recent months confidence levels have revealed signs of resilience, despite high inflation dragging on consumers. Consumer prices rose by 2.9 per cent in the year to August, far outstripping expected wage growth for the month, according to Office for National Statistics data.
Nina Skero, CEBR head of macroeconomics, said: “Despite various sources of uncertainty, both politically and economically, consumer confidence in the UK is proving to be remarkably resilient.
“While household budgets continue to feel the squeeze from inflation, other measures have rebounded somewhat.”
The increase in consumer confidence has coincided with research showing cautious optimism from British businesses. Santander’s survey of firms found 71 per cent expect growth in the next 12 months.
That came in spite of 73 per cent fearing a UK economic slowdown could dent their business in the next year. The Brexit process remains the key concern for businesses, two-thirds of which believe it will harm their business in the next 12 months – a nine per cent increase since the same question was asked in April.
Firms are also showing “resilience”, said John Carroll, head of international at Santander corporate and commercial.
He added: “In the current uncertain environment, British businesses undoubtedly see increasing risks on the horizon. Yet we should not mistake concerns about the wider trade environment for a sense of pervading doom and gloom.”