By Xavier Fontdegloria
Consumer Confidence in the U.K. increased in February, driven by a sharp rise in economic expectations over the next year amid a swift Covid-19 vaccine rollout.
GfK’s consumer-confidence barometer stood at minus 23 in February, up five points from the previous month and the highest level since the coronavirus pandemic hit the country.
The reading is above forecasts from economists polled by The Wall Street Journal, who expected the barometer to come in at minus 25.
Consumer confidence in the U.K. had largely moved sideways since April, when it plunged on a standstill in activity owing to initial lockdown measures taken in spring. Despite February’s gain, the index is still well below its prepandemic level of minus 9.
February’s rise in consumer confidence was boosted by a 14-point jump in how Britons view the economy for the coming year, the data showed.
GfK’s Client Strategy Director Joe Staton said that, while it would be tempting to talk of a return to normality, there are still challenges ahead and the overall five-point recovery might not be enough for the index to spring back to life.
“We need to be cautious because the positive tailwinds of the vaccination rollout are being met by the very strong headwinds of unemployment, the threat of inflation and the difficulty that many face in affording day-to-day living costs–all serious issues that can dampen consumer confidence,” he said.
Four out of the five measures that make up the consumer-confidence barometer increased from the previous month, while one remained unchanged.
In addition to the surge in economic expectations for the coming year, households’ assessment of the general economic situation for the past year increased by three points, along with the major purchase index–which gauges demand among shoppers and rose by five points– as well as consumers’ outlook on their personal financial situation over the coming year, which edged up two points.
“Perhaps the key lies in the healthier score for how we see our personal finances going forward as this will impact our spending plans that in turn will fuel the postpandemic economy,” Mr. Staton said of the slight uptick in expectations of personal finances index.
The survey, carried out by German market research firm GfK, polled 2,000 individuals between Feb. 1 and 12, amid a continued decrease in Covid-19 case counts and hospitalizations across the country.
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(END) Dow Jones Newswires
February 18, 2021 19:15 ET (00:15 GMT)
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