UK household earnings rise at sharpest rate in a decade as spending ticks up
UK household earnings have risen at their fastest rate in a decade and consumers increased their spending in April.
The IHS Markit survey also suggested that the current downbeat consumer sentiment could turnaround in the next few months.
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While spending rose, appetite for big-ticket purchases, such as holidays and cars, continued to fall sharply suggesting households were still holding back.
The data firm’s household finance index (HFI), which measures household perceptions of financial wellbeing, rose to a three-month high as pessimism weakened.
The increase was led by strong wage growth and an improvement in job security perceptions.
The growth in earnings from work was the strongest since the IHS Markit survey began in 2009.
“The bright spot for the UK in recent months has been the resilience of its labour market, and the latest survey data from households revealed that some of the positivity seen in the hard numbers has filtered through to sentiment and is supporting household finances,” IHS Markit economist Joe Hayes said.
“Households also moderated their concerns over job security, supporting a more relaxed approach to overall spending.”
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When it came to household expectations of the Bank of England’s next move over interest rates, there was little change.
Two-thirds expected a rise in the next 12 months, in line with March’s survey, but those predicting an increase in the next six months fell from 46 per cent to 39 per cent.