UK GfK Consumer Confidence: Edging down, but still elevated

The November GfK consumer confidence index declined 1 point to 1, its third consecutive drop, but nonetheless remains elevated compared to historical levels. Each category registered a decline, with the exception of savings intentions over the next 12mths (+3pts) and major purchase intentions (last and next 12mths; each increasing by 2pts). Meanwhile, in each category, the outlook over the next 12mths continues to be less optimistic compared with the outlook over the previous, with the exception of savings where the outlook over the next 12mths continues to improve relative to the outlook over the previous.

Further, the November print underscores the continued divergence in confidence by income tranche. However, the poorest (those on less than £14.5k per year) confidence increase marginally (by 1pt) while sentiment of those on more than £50k declined by 1pt. As the Autumn Statement (released Wednesday 25 November 2015) reversed the main tax credit cuts announced in July 2015, which would have disproportionately hit the poorest members of society the most, we may in fact see their sentiment levels continue to improve.

While consumer confidence remains elevated in light of low inflation, consumers continue to feel moderately less confident about the future. This supports the macro scenario whereby private consumption is strong, and the primary driver of economic growth, but eases into H2 15 and 2016. Anecdotal evidence from the GfK press release suggests that this is due to global economic worries, with "confidence depressed by a combination of wider economic, political and social events". This may be weighed on further as the impact from fiscal austerity is felt, in light of Wednesday's Autumn Statement, and as inflation picks up at the start of 2016.