UK consumer confidence drops in June - GfK

Consumer confidence in the UK fell in June as Britons grew increasingly gloomy about the economy, according to a widely-followed survey.

GfK's long-running consumer confidence index fell two points this month to -9, missing expectations for it to remain unchanged at -7 and with all five of the key measures dropping.

Of the five key metrics, the measure for the general economic situation over the last 12 months and the one for the general economic situation over the next 12 months saw the biggest declines, each falling four points to -28 and -25, respectively.

Client strategy director Joe Staton said: "Scores on personal finance are down but there is a more marked deterioration in our levels of optimism about the general state of the economy, with the verdicts on the past year and the coming year each tumbling four points. When will the strong jobs market and low interest rates boost the economic mood? That’s the key to confidence increasing more generally.

"Meanwhile, with Britain’s hard-pressed retail sector very much in the news, there is little comfort in the one-point drop to zero in the Major Purchase Index. Shoppers are holding on to their cash and consumers in general seem set on their path of self-imposed austerity. The overall index score has now registered at zero or negative for 30-months. Contrast that with 2015 - when there was a full year of positive numbers. The trend since those 2015 figures has been resolutely downwards and it’s difficult to see the direction changing in the run-up to the UK leaving the European Union in March 2019."

Shore Capital analyst Greg Lawless said this month’s tick down in consumer confidence is somewhat surprising given the warm weather in recent weeks, which should have released some pent-up demand, particularly for seasonal players including the grocers, garden centres and clothing retailers.

"In recent weeks there has also been some easing in public sector pay constraints which may help consumer sentiment. Perhaps, the recent rises in forecourt petrol prices have also exerted short–term pressure on consumer’s disposable income, which is being reflected in this month’s index. Overall, consumers remain cautious but, in our view resilient and today’s GfK data is fairly unexciting economic news.

"We remain cautiously optimistic about prospects for the remainder of 2018 despite political and economic uncertainty, as consumers seem to get on with their day-to-day lives despite the impending unknown features of Brexit."