Markit: UK households upbeat about finances

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The latest Markit Household Finance Index shows the slowest deterioration in UK household finances for two years with savings under less pressure and the outlook improved.

Markit's latest household finance index shows an improvement as extra work help increase spare cash and inflation expectations recede.

The latest Household Finance Index (HFI) from Markit reveals that UK households are at their most optimistic about their finances since the end of 2008.

A mixture of more work, more belief that the economic recovery is gathering pace and higher incomes has helped lift the financial hopes of UK households.

The HFI went up from 40.8 in June to 41.5 in July, the highest level since the survey began in February 2009 and the fourth increase in the last five months.

Tim Moore, Senior Economist at Markit said: "The latest consumer sentiment survey shows that it's not just the weather that has taken a turn for the better in July, as diminishing job insecurities and rising workplace activity helped lift the household finance barometer to its highest mark since the survey began four-and-a-half years ago.

"Signs of a sustained recovery across the UK economy and a corresponding upturn in labour market conditions were key factors in alleviating strains on consumer budgets."

26 per cent of people said their finances had deteriorated in July, whilst nine per cent noted an improvement. The majority, around two-thirds, said there had been no change.

Markit reports that people who rent from a private landlord are the least downbeat about their finances, while those who rent from a local authority or housing association are the most downbeat.

Expectations for future finances posted their fifth successive improvement. The index detailing how respondents think their financial situation will change in the next 12 months moved up from 44.4 in June to 45.3 in July, the highest level since March 2010. 37 per cent of respondents expect to see their finances get worse in the next year, against 26 per cent that anticipate deterioration.

People working in the private sector are more optimistic about future finances than their counterparts in the public sector.

The index measuring workplace activity went up from 52.8 in June to 54.8 in July, the sixth month in succession that this particular index has been in positive territory above 50.0.

Levels of job security also increased slightly and this helped raise the income from employment index to 51.3, up from 48.4, the highest level since May 2010.

However, inflation perceptions went up from June's 35-month low, from 81.3 in June to 83.3 in July.

Mr Moore added: Increased income from employment during July, alongside a much less downbeat assessment of financial wellbeing among people in the private rental sector, highlighted a broad change of momentum. Private sector workers reported the most marked rise in income levels since the survey began four-and-a-half years ago.

"Moreover, households indicated that growth in workplace activity was sustained during July, which provides encouragement that the financial picture will continue to brighten even after the mercury stops rising this summer."

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