Lloyds Bank

Consumer confidence bounces back says Lloyds Bank

24 November 2014


  • Consumer confidence increases five points to 151, the second highest on record
  • All indices record an upward trend for October
  • Spending on automotive fuel and gas & electricity bills continues to fall

The Lloyds Bank Spending Power Report for October finds that consumer confidence has increased to reach its second highest score since the start of the index, climbing five points to 151. October also saw sentiment increase eight points towards the UK’s economic situation from last month, to 283 points, showing an improvement in confidence towards the UK economy ahead of the Autumn Statement, while sentiment towards the current situation climbed 10 points to 186.

For categories of essential spend, the continued decline in petrol prices has seen average spending on fuel around 6% lower than this time last year, helping to ease the pressure on budgets and bolster household incomes. Among other categories, warmer conditions earlier in the year resulted in lower energy usage, which is still helping to keep gas and electricity bills low at around 5.5% lower than this time last year.

Patrick Foley, Chief Economist at Lloyds Bank, said: “Consumers remain in a positive mood, with the pressure on budgets from essential spending lifting a little. Though risks around the economic outlook have risen somewhat, emerging signs of a modest strengthening in real wage growth should help support  the UK recovery.”



Current situation


Consumer sentiment towards the country’s financial situation declined in October with the balance of opinion at -36%, despite an increase of 22 percentage points from this time last year. Greater London continues to be the most positive region with an increase from -12% to -9%. A decrease in opinion of 13 percentage points across Yorkshire and Humberside makes it the least positive region at -53%.

Feelings towards the housing market continue to remain broadly stable since June with a balance of -14%, an increase of four percentage points since this time last year, which is consistent with the easing of price growth and cooling of market conditions that has been seen in recent months. Greater London is one of the most positive regions, standing at -10%, which is similar to that of this time last year (-12%), however the region remains lower than in the early part of 2014, when it reached its peak in January at 9%.

Attitude towards the current employment situation saw a six point increase in October to -20%, suggesting that sentiment is returning to the upward trend noted in August of -18%. There has also been a 34 percentage point increase in sentiment compared to this time last year. This can be attributed to further job creation and emerging signs of wage growth, which is picking up. There has been an increased improvement across all regions apart from Yorkshire and Humberside, which is now the most negative region (-44%).

Consumers’ sentiment about their own personal financial situation remains positive at 13% despite a five point fall. However, the balance of opinion has improved eight points from this time last year. There continues to be a positive balance across all regions except for Wales, which has dropped 15 points to -5%. Opinion across West Midlands saw a decline of eight points this month, taking the balance of opinion to 20%. This, coupled with an uplift of one point across the South East has seen the South East become the most positive region for October (25%).

Greg Coughlan, Director of Personal Current Accounts at Lloyds Bank said: “The improvements we have seen from last month is a positive sign for all consumers, especially in the lead up to Christmas where finances are often stretched. The continued improvement in individuals personal finance situations, shows that consumers are having more confidence in their own finances.”



Future situation


The balance of opinion on future discretionary income between those feeling they will have more versus less money in the next six months remains stable since July at 6%, increasing 11 points from this time last year. Depsite the balance tipping positively, over half of people (55%) think there will be no change in their discretionary income levels. From being the most negative region in September, the North East saw a 17 point increase in October to 10%, making it now one of the most positive regions after East Midlands and Greater London (13%).  Those in the South West were the most negative at -8%.

Consumers continue to have a positive sentiment towards future saving with a balance of 14%. All regions held a positive balance for October, with Greater London being the most positive region after a two percentage point increase to 21%. Wales, last month’s most positive region saw the biggest decline, dropping 15 points to 7%. A drop of six percentage points across the South East made it the most negative region at 5%.

Meanwhile, the balance of opinion on future spending remains negative at -4% this month, a one point drop. A 14 percentage point drop across Northern Ireland has made it the most negative region with a balance of -17%.

See full release