UK households’ financial perceptions deteriorate in July

The seasonally adjusted UK Household Finance Index of Markit has hinted that the financial perceptions of UK households deteriorated in July. The index dropped to 44.3 in July from 44.8 in June, remaining below the 50 mark. According to Markit, the extent to which finances worsened was the second strongest since January. Within the monitored job sectors, media/culture/entertainment and IT/telecoms employees registered an improvement in financial wellbeing. The rest of the six categories noted a fall.

The decline was widespread in terms of income bracket. The highest earners were also subdued regarding their July’s financial situation. Larger strains on the finances of household partially reflected a decline in workplace activity for the first time since May 2012, noted Markit. This added to concerns regarding job security, although income from employment climbed at a more rapid rate. In the mean time, price pressures softened to the weakest in four months.

Consistent with the increasing political and economic uncertainty after the Brexit vote, the UK households have registered the worst financial outlook in two-and-a-half years in July, stated Markit. The seasonally adjusted index gauging expectations for finances in 12 months’ time indicated towards negative sentiment for the fourth consecutive month. Public and private sector workers are pessimistic regarding the year ahead.

Meanwhile, activity in the workplace dropped for the first time in more than four years in July. The pace of drop, although modest, was the most rapid since March 2011. In the private sector, activity fell for the second time in three-and-a-half years, whereas the growth rate decelerated in the public sector. The fall in activity seemed to have impacted sentiment of employees towards their job security in July.

In the meantime, income from employment was up for the fourth consecutive month. Moreover, the rate of salary inflation accelerated to a survey record high, stated Markit. Current inflation perceptions softened in July. The seasonally adjusted index dropped to 64.3 in July from June’s 67.7. It was the lowest in four months.