UK consumer confidence improved in the first quarter of 2018, rising by one percentage point from Q4 2017, according to the latest Consumer Tracker report from Deloitte. With confidence in the previous quarter flat compared to Q3 2017, the uptick in sentiment in the first three months of 2018 is an indication that the economic pressures that have been facing consumers over the past year may be starting to ease.
The Deloitte Consumer Tracker - confidence grows but spending stutters
- Consumer confidence grows by one percentage point to -6% in Q1 2018
- UK consumers feel more upbeat about their personal finances; confidence about disposable income rises two percentage points from Q4 2017
- Job security is a concern, with confidence falling two percentage points
- World Cup and improved weather could boost confidence further in Q2 2018.
The Deloitte Consumer Tracker measures UK consumer confidence on a quarterly basis.
The quarterly survey of more than 3,000 UK consumers, carried out between 23 and 26 March 2018, saw overall consumer confidence rise to -6% in Q1 2018, up from -7% the previous quarter. Overall consumer confidence is now at its highest level since Q4 2016 and, whilst confidence remains in negative territory, the latest results are a positive step from a score of -10% in Q2 2017 which was a low point for consumer confidence in recent years.
Despite UK unemployment being at a historic low, job security remains a key area of concern for consumers, and has fallen by two percentage points compared to Q4 2017. Despite growing confidence about job opportunities, which rose one percentage point compared to the previous quarter, Q1 2018 saw a series of high profile administrations alongside a number of large consumer businesses announcing significant headcount reductions which may have weighed heavily on consumers’ minds.
Ian Stewart, chief economist at Deloitte, said: “Confidence has crept up against a backdrop of consumer-friendly economic conditions. Unemployment has hit a 43 year low and is stoking wage pressures while falling inflation will boost consumer spending power and has eased the pressure for rate rises.
“The consumer picture mirrors that of the business landscape, with Chief Financial Officers also reporting an uptick in confidence following the announcement of the Brexit transition deal.
“It remains to be seen to what extent consumers will continue to exercise caution in 2018, and not-too-distant memories of tougher times could yet outweigh consumers’ willingness to spend.”
The latest Consumer Tracker also revealed UK consumers’ spending habits for Q1 2018, and the extent to which UK spending continues to be under pressure.
According to the research, consumers are continuing to prioritise their spending on essential categories such as utility bills, transport and food and drink, with spending rising by one percentage point to +13% compared to the same period last year. By contrast, discretionary spending, which includes going out, furniture and electrical appliances, remains flat, at -6% compared to a year ago.
Paul Schofield, Deloitte Cambridge practice senior partner (pictured), commented: “Despite the positive economic outlook and growing consumer confidence, results from this quarter’s Tracker suggest that these are yet to translate into an overall increase in spending.
“Consumer business, and in particular the retail and casual dining sectors, have had to face unprecedented challenges over the last year. Cautious spending, increased competition and rising labour and rental costs have been the cause for much head scratching across the sector.
“Looking ahead, Q2 confidence may improve further with the belated arrival of warmer weather and optimism ahead of the World Cup which is an event that has historically provided a boost to consumer spending across a range of categories, especially if the national team progresses to the later stages of the competition.”
The Deloitte Cambridge office comprises 7 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business and agriculture.