MNI INTERVIEW: Early Signs UK Consumer Sentiment Improving-Gfk

UK consumers are starting to feel less downbeat about the prospects for the economy, although sentiment still sits close to historically low levels, the head of a closely-watched monthly survey told MNI.

"The headline consumer confidence score is still severely depressed and the mood as well as the economy remain a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023," Joe Staton, Client Strategy Director at GfK told MNI.

The latest GFK Consumer Confidence survey saw sentiment bounce six points in February to -39. Every one of the main sub-indices rose -- although all remain in deeply negative territory. The personal finances outlook -- a sub-index watched closely by Staton as a lead indicator, bounced nine points to -18, just four points lower than a year ago.

"Consumer optimism over their own finances has picked up, despite the continued headwinds of inflation still outstripping wage rises, along with the ongoing household challenge from the cost-of-living crisis", Staton said.

There is even a better sentiment for the general economic outlook, particularly for the next 12 months, he added.

DON'T GET CARRIED AWAY

Although an uptick across all recorded measures should be welcomed, Staton said it is far too early to talk about “green shoots of recovery”.

It was unclear to Staton exactly what helped boost sentiment this month. "Are people simply fed up with all the bad news? Do they see a milder recession than predicted? Is there a sense that the most worrying months of the energy crisis are behind us?”

The Savings Index gained five points to +19; five points higher than this time last year. Staton would normally see this as a sign of consumer retrenchment, but, with savings rates edging higher "perhaps people are locking in some better returns".

Despite the uptick in sentiment, Staton warns we aren't out of the woods yet.

"Many challenges remain and this may be nothing more than a bubble of hope – and bubbles always burst,” he said. "Let's see what next month brings ... another round of improved sentiment and the outlook really might be more doughnut than hole”

Staton's comments and the survey's findings echoed recent comments from Grant Fitzner, chief economist at the Office for National Statistics, who said "bright spots are appearing through the gloom." (MNI INTERVIEW: Some Good Signs Amid Sluggish UK Growth-ONS)