Economic confidence seems to be improving

Stephan Shakespeare
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GOOD economic news may not be that easy to come by, but following on the back of yesterday’s inflation news the July numbers from YouGov HEAT (Household Economic Activity Tracker) give some cause for optimism, with the steady decline in economic confidence of the past few months at last reversing.

The Index score, which takes into account household financial situation, job security, house price sentiment and business activity at respondents’ place of work, rose from 94 (out of 200) to 95.

That may not be a huge rise but, significantly, it is no longer falling.

The year started promisingly with big gains between December 2011 and March 2012 but since then we have seen a decline, coinciding with drops in confidence in the government’s handling of the economy following George Osborne’s Budget speech in March.

The biggest positive that we see is the rise in job security with the public feeling more secure in their jobs (or more accurately, less insecure) compared to the previous month than at any time since YouGov started collecting that data in February 2009.
That figure is up from 88 in June to 92 in July and beats the previous high of 90 seen in November 2009.

Again these scores are out of 200, so we should not kid ourselves that a score of 92 shows that all is rosy in the world. However, it is a start and indicates that the long-term lack of confidence in Britain’s households might just be starting to dissipate.

So there are definitely some positives to build on, but to put the rises into context, I have included three years-worth of data on the chart to show the country has, for quite some time, been stuck in a negative situation.

Occasional rises (such as the boost around the royal wedding last spring) have given intermittent hope but never really amounted to anything.

What we really need now is for the HEAT score to break through the important 100 mark and sustain that – perhaps the Olympics and (whisper it quietly) the summer might raise the mood of the country and help translate the small gains of July into something more substantial.

Stephan Shakespeare is the chief executive of YouGov