Consumer confidence in the UK edged up in December but morale remains close to all-time low levels.
GfKs monthly consumer index, which measures changes in personal finance for UK citizens, rose in December to -42 from a score of -44 in November.
GfK said it was the first time in the survey’s 50-year history that the index has been at minus 40 or worse for eight months or more in a row.
The reading for people’s personal financial situation over the next 12 months remained at -29 and the major purchase index was at -34, although this was an improvement of four points on the previous month.
Joe Staton, GfK’s client services director, said: “Real wages are falling as inflation continues to bite hard, further straining the discretionary budget of many households as we enter the last few shopping days before Christmas.”
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The reading of -42 is still near to the record low of -49 recorded in September.
Staton added: “The outlook for our personal financial situation over the next 12 months — perhaps the key metric as we enter a new year — is stuck at -29, and concerns about our economic future remain acute,”
“With scant seasonal joy at present and no immediate prospect of fiscal good news, it is unlikely we will see a rebound in confidence anytime soon,” he added.
This comes amid disappointing UK retail sales data from the ONS, which revealed that the World Cup and Black Friday sales promotions had failed to produce the expected sales uplift in November.
UK retail sales slid unexpectedly in monthly terms in November, a potential indication of the stress felt by many households as the cost of living crisis eats into their finances.
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Retail sales volumes dropped by 0.4% in November after a 0.9% rise in October which had represented a bounce from September when sales were affected by a one-off public holiday to mark the funeral of Queen Elizabeth.
And in yet another blow to the economy, the latest PMI data pointed to a contraction of UK private sector output for the fifth month running in December amid a further deterioration in client demand.
At 49.0 in December, the headline seasonally adjusted S&P Global/CIPS Flash UK Composite Output Index posted below the neutral 50.0 value to signal a fifth successive monthly fall in private sector business activity.
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “The December data adds to the likelihood that the UK is in recession, with the PMI indicating a 0.3% GDP contraction in the fourth quarter after the 0.2% decline seen in the three months to September.
“For now, the downturn looks to be relatively mild, and the easing in the rate of decline in December is encouraging news, as is the further marked cooling of inflationary pressures.
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“However, the fact that the downturn has moderated compared to the turmoil created in the immediate aftermath of the botched ‘mini budget’, most notably in financial services, is no real cause for cheer. It is especially worrying to see business confidence and order book indicators remain so low by historical standards, with both of these key gauges signalling heightened degrees of economic stress.
“Hence it’s no surprise to see that businesses are battening down the hatches, most notably by reducing headcounts, in a sign that the downturn not only has further to run but could yet accelerate again, especially given December’s further hike to interest rates.”
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