Confidence edges lower but those at the top remain cheerful

Stephan Shakespeare
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ECONOMIC confidence among consumers has continued its downward path in June, according to the latest figures for YouGov’s Household Economic Activity Tracker (HEAT) – but this is not necessarily a reason to worry yet.

The first three months of the year saw the index accelerate upwards, but that momentum stalled in April and scores have been going down ever since.

The overall index, which is an amalgam of household economic activity, job security, business activity in respondents’ workplaces and house price perceptions, fell slightly from 95 in May to 93 in June.

We should not get overly negative about the decline – the Index is still higher than at any time in 2011 apart from April (when the royal wedding and a sunny spring briefly inspired a rise in confidence) – but it is somewhat concerning that we do seem to be on a negative trend.

Looking at the figures, the largest driver of the fall this month has been business activity levels at respondents’ places of work.

Retrospective scores (change over the past month) saw a six point drop – down from 110 in May to 104 in June.

Expected change over the forthcoming 12 months also became gloomier – falling from 119 in May to 116 in June.

This contrasts with the peaks seen in March, when the retrospective score was at a 12-month high and prospective levels stood at an all-time high.

Diving deeper into the data, one interesting finding is that while the overall HEAT index has gone down, for those earning £50,000 or more it has actually risen and is now on 106, a two-year high.

The gradual rise in confidence among higher earners now means that those on top wages are a whopping 13 points above the UK average.

That shows that while the country as a whole is feeling less confident about the economic future, the well-off appear to be increasingly assured about their position.

Stephan Shakespeare is the chief executive of YouGov