The Markit Household Finance Index shows that at 38.8 in November, down sharply from 41.0 in the previous month, households’ overall perceptions of financial wellbeing was the lowest since April and well below the neutral 50.0 value.
Around four times as many households (29%) reported a decline in their finances during November as those that saw an improvement (7%).
People working in the retail sector were the most pessimistic about their finances in November, while those employed in finance/business services and IT/telecoms reported the least marked rates of deterioration.
November data signalled a worsening outlook for financial wellbeing over the next 12 months. Almost 42% of households expect that their finances will have deteriorated in one year’s time and only 24% forecast an improvement.
Tim Moore, senior economist at Markit and author of the report said: “November’s survey highlights yet another setback for UK household budgets as weak pay trends and energy price rises appeared to overshadow recent positive news about labour market conditions.
“Households’ views on their year-ahead financial outlook are now the most downbeat since February and well below those reported this summer, despite recent signs of stabilising job security.
“With pay falling further behind living costs, households saw the fastest fall in their cash available for discretionary spending since April. Therefore, the latest survey highlights underlying fragilities in UK consumer sentiment and provides a timely reminder that bumper spending levels over the festive season are not yet baked in the cake.”
