GfK/NOP Consumer Confidence (Jul.) - Capital Economics
UK Economics

GfK/NOP Consumer Confidence (Jul.)

UK Data Response
Written by Gabriella Dickens

Consumer confidence recovered a little in July, but rising concerns about a no deal Brexit could mean that sentiment soon returns to its recent lows.

Confidence strengthens, but unlikely to rise further over next few months

  • Consumer confidence recovered a little in July, but rising concerns about a no deal Brexit could mean that sentiment soon returns to its recent lows.
  • The composite GfK/NOP measure of consumer confidence rose from -13 in June to -11 in July. Admittedly, that was still below its long-run average of -9. (See Table 1.) But the details of the survey were encouraging, with the rise broad-based across the sub-balances. And the EC’s measure, which seasonally adjusts the GfK figure, suggests it would have been higher if it weren’t for seasonal factors.
  • Consumers were more optimistic about their own financial situation over the next 12 months with the own finances balances rising by 5 points from +2 in June to +7, its highest in just under a year. Consumers even appeared a little less pessimistic about the economic outlook over the next 12 months.
  • Yet on the face of it, the headline measure of consumer confidence is still only consistent with retail sales growth of around 3% y/y. (See Chart 1.) And households were less keen to make big ticket purchase – the major purchases balance fell 2 points from -2 in June to -4.
  • And note that the survey was carried out from the 1st – 14th of July, before Boris Johnson was elected Prime Minister. As a result, confidence in the UK economy could be knocked in August’s data due to rising concerns over a no deal Brexit. After all, the economic outlook balance has tended to follow the twists and turns of the Brexit saga closely.
  • Overall, while we doubt the rise in consumer confidence in July is the start of a recovery, robust wage growth and benign inflation means confidence and household spending probably won’t fall drastically either.

Chart 1: GfK Own Finances Balance & Retail Sales

Source: GfK, Refinitiv, Capital Economics

Table 1: GfK Consumer Confidence

2018

2019

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Composite index

-10

-7

-9

-10

-13

-14

-14

-13

-13

-13

-10

-13

-11

Economic sit. over next 12m

-26

-26

-27

-28

-32

-38

-39

-38

-36

-34

-29

-33

-32

Own finances over next 12m

7

8

5

4

3

-1

1

1

2

0

5

2

7

Climate for major purchases

-2

6

6

4

-3

2

2

5

1

-1

1

-2

-4

Sources: GfK, Refinitiv


Gabriella Dickens, Assistant Economist, +44 20 3974 7421, gabriella.dickens@capitaleconomics.com