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4th July 2016
Household spending grew by 0.7% during the first quarter of 2016 compared with Quarter 4 2015, according to data released by ONS. Household spending when compared with the same quarter a year ago has been showing positive growth each quarter since Quarter 4 of 2011. It was 2.8% higher in Quarter 1 2016, when compared with Quarter 1 2015.
Households spending on ‘big ticket’ items was sharply higher; spending on furniture & furnishing was 6.1% up on a year ago while purchases of major household appliances were up 24.8% (in volume terms). The rise in big ticket purchases reflects rising consumer confidence. It is a positive sign for housebuilders as well as retailers, with increased spending on furnishings and household spending associated with a rise in house moves.
However a survey carried out in the immediate aftermath of the EU referendum suggests that there may be a marked retrenchment in consumer spending over the coming months. The YouGov/CEBR Consumer Confidence Index, which measures people's economic sentiment on a daily basis, slumped to its lowest level since May 2013, when Britain's economy was just starting to emerge from its post-financial crisis sluggishness.
The index fell to 104.3 during June 23-27 compared to 111.9 in the first three weeks of June and 113.6 in May.
This points to a weakening in household spending over the summer months. It is too early to judge whether this marks a sustained downwards shift in consumer sentiment. Confidence may begin to improve as current political turmoil subsides and the UK’s post-Brexit future becomes clearer.
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