UK households’ perception of financial well-being remained negative in February, but was the highest recorded in eleven years as the pessimism on job security and the living cost inflation eased, survey data from IHS Markit showed on Monday.
The household finance index rose to 47.6 in February from 44.6 in January. Any score below 50 indicates contraction.
This was the highest score recorded since the beginning of the survey, eleven years ago, IHS Markit said.
The index is compiled based on the results of an online survey by Ipsos MORI between February 6 and 11 among 1,500 adults aged 18-64 across Great Britain.
The Future Household Finance Index that measures the expected change in financial health over the next 12 months rose to 52.7 in February from 49.6 in January.
The level of optimism was at its highest since the data were first collected in February 2009, exceeding the previous peak seen in January 2015, IHS Markit said.
Britons were less pessimistic regarding job security in February and the respective index climbed to a seven-month high.
Further, the rate of growth in both workplace activity and
income from employment rose from the previous month.
The expected living cost inflation eased to the lowest level in forty months in February and inflation expectations was the weakest since September 2016.
The survey showed that perceptions of current house prices rose at the strongest rate in almost three years. House price expectations were the strongest since August 2018.
Expectations of the Bank of England’s next move being an interest rate cut increased, with the proportion at around 27 percent, its highest since August 2016.
“Survey data are leading the way for information on the post-election and post-Brexit period in the UK, and our latest Household Finance report signals a number of developments that should keep the Bank of England doves at bay and build optimism towards the UK’s immediate economic prospects,” Joe Hayes, economist at IHS Markit, said.
“Post-election survey data so far scores a fairly good chance a first
quarter GDP pickup following a flat end to 2019,” the economist added.
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