Lloyds Bank

Consumer confidence pauses for breath

21 July 2014

  • The Lloyds Bank Spending Power Report measure of consumer confidence dips for the first time in 2014
  • Overall spending growth on essentials remains broadly stable, around 1% higher than a year ago
  • Gas and electricity and automotive fuel spending continues to fall

The Lloyds Bank Spending Power Report for June saw its first dip of 2014 for consumer confidence, with the overall index easing a percentage point to 145 points. However, overall spending growth on essentials remaining broadly stable, at around 1% higher than a year ago, limiting the pressure on consumer wallets.

Among categories of essential spending, the fall in spending on gas and electricity has accelerated, with average spending around 2.5% lower than a year ago, while the pace of decline on automotive fuel spending has levelled out to around 5.5% lower than a year ago. In addition, various sporting events last month may have helped drive a rise in food and drink spend from around 1.5% to around 2.5% in June, driving the overall slight increase in essential spend growth.

Patrick Foley, Chief Economist at Lloyds Bank, said: “Notwithstanding a modest easing in confidence, the economic backdrop for consumers remains positive, particularly so in light of continued gains in employment.  Meanwhile, limited pressure on consumer wallets from essential spending also helps support consumers’ capacity to undertake discretionary spending in the months ahead.”

Current situation

Consumer sentiment towards the country’s financial situation improved in May with the balance of opinion (those who feel the country’s financial situation is “excellent”, “very good” or “somewhat good” versus “not good” or “not good at all”) standing at -30%, an increase of two points from last month.

 Those in Scotland are amongst the most negative at -46%. This is in contrast to Greater London, which continues to be the most positive region, edging further towards a positive balance at -2%, a 12 percentage point increase from last month at -14%.

However, feelings towards the housing market have fallen eight points to -12% in June. Despite this fall in balance of opinion, the overall balance has still seen an improvement of 26 points from -38% this time last year.The South West and South East of England continue to be the most positive regions at at 5% and 0% respectively, which is in contrast to the North East at -28% and Scotland at -26%, which are the most negative.  

Sentiment towards the country’s employment situation has remained relatively stable at -26% for June, a two point increase from May. Compared  to this time last year, the balance of opinion has increased by 41 percentage points from -67%. The North East remains the most negative region, falling 7 points with a balance of -55%. Greater London continues to be the most positive and is the only region with a positive balance, sitting at 3%.

Consumers’ sentiment towards their own personal finances continues to maintain an overall positive balance of opinion, despite seeing a slight decline of 4 percentage points from May, taking it to +14%. Opinion has notably improved with a positive balance across all regions, with Greater London and the South East holding the most positive balances both at +25%.

Philip Robinson, Director of Personal Current Accounts at Lloyds Bank said: “With a firm improvement in consumer confidence throughout the course of the year, despite the slight dip seen this month, customers can take comfort in what continues to be a stable 2014. Additionally, various sporting events throughout the summer may have helped drive an increase in current account spending. In the lead up to summer holidays, by paying close attention to spending habits, we can all feel more in control of our 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 has fallen this month from +6% in May to 0% in June. The North East continues to be one of the most negative regions with a balance of -9%, down from -2% in May. In contrast, those living in Greater London continue to have the most positive outlook with a balance of +15%, which remains unchanged from last month.

Sentiment towards future saving remains relatively stable at 10% in May, a 2 point decrease compared to last month. Those living in Greater London continue to be the most positive at 26%, while those aged 18-24 are the most positive about saving more in the future, with a net balance of 52%.

Meanwhile, the balance of opinion on the future of spending was little changed this month at 0%. Those aged 18-24 continue to be the most negative age group towards future spending, with a balance of -14% in June.


Notes to Editors:

The Lloyds Bank Spending Power Report is derived from independent consumer research and current account data of Lloyds Bank, Halifax and Bank of Scotland customers.  This provides a robust and representative sample of the entire UK market and its essential spending behaviours.

Each month, over 2,000 consumers are asked about their current and future spending habits and how their commitments affect their spending power1.  Essential spending components are made up of rent, mortgage and required debt payments, utility bills, council tax, TV licences, food and fuel, which are identifiable from card spending, direct debits and standing orders.  There are strong calendar effects within essential spending components, some of which will be accounted for using year-on-year growth rates while we attempt to adjust for irregular calendar effects. As a longer history of data becomes available, the adjustment methodology may be altered in future to better correct some of these changes.

[i] Consumer research is compiled in conjunction with TNS Financial and Professional Services.  A total of 2,307 UK consumers were questioned.  Interviewing took place via an online survey between 10 – 16 June 2014.

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