Earnings rise at fastest rate for a decade, boosting household finances - survey
UK households are becoming more confident about their finances, a survey showed today, buoyed by the fastest rise in earnings for a decade.
The IHS Markit Household Finance Index, which measures households’ overall perceptions of financial well-being, reached a three-month high of 44.0 in April, up from March’s figure of 43.4.
The increase was attributed to strong wage growth, with IHS Markit noting “a marked uptick” in earnings from employment. The rate of growth was now the strongest since the survey began in 2009, it added. Workers also reported improved perceptions of job security.
As a result, household spending rose during April, although purchases of big-ticket items such as cars and holidays continued to decline.
Consumer sentiment had faltered in recent months, as concerns about Brexit and the wider global economy weighed heavily, despite high employment levels, increased earnings and low interest rates. Retail sales in particular had struggled, although March data had shown an improvement, helped in part by milder spring weather.
Joe Hayes, economist at IHS Markit, said: “The bright spot for the UK in recent months has been the resilience of its labour market, and 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.
“Householders also moderated their concerns over job security, supporting a more relaxed approach to overall spending. Nevertheless, appetite for major purchases continued to falter, suggesting that households are still holding back on those big-ticket purchases.
“Overall, April data suggest the downbeat consumer sentiment story in the UK could turnaround in the coming months if trends in wages and job security remain accommodative, helping to drive domestic expenditure.”