Household spending in July continued to increase from the eight-year low experienced in April, the latest figures from the IHS Markit Household Finance Index reveals.
However, spending is still subdued compared with that seen before the coronavirus pandemic.
The HFI is compiled each month using data from Ipsos Mori, and is intended to accurately anticipate changing consumer behaviour.
IHS says any reading below 50.0 is indicative of an overall squeeze on household finances. July’s figure is 41.5 – but this is up from 40.7 in June and 34.9 in April.
The report said the phased reopening across parts of the UK economy appeared to have been a factor supporting household finances, with a slightly improved situation for income from employment and workplace activity.
However the survey also found that households were still focussed on reining in household debt and increasing savings if possible, with the overall appetite for unsecured borrowing dropping for the first time since the survey began in 2009.
And pessimism about job security has led to a worsening of the measure for households’ financial outlook in the next 12 months. Nearly four times as many survey respondents (31%) reported a decline in job security during July as those that indicated an improvement (8%).
Asked about interest rate fluctuations, 49% of households felt there would be an increase in interest rates within the next year, compared to 19% who felt there might be a cut.
Tim Moore, director at IHS Markit, said: “July data illustrates that UK households continue to tighten the purse strings despite a phased reopening of the economy and return to work after the lockdown period.
“The survey measure of demand for unsecured borrowing such as personal loans and credit cards has dropped to its lowest mark since the survey began in February 2009, with extremely cautious spending patterns reflecting widespread anxiety about jobs and the outlook for earnings.”
