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Economy

Consumer confidence reaches record-high in February

The IHS Markit Household Finance Index reached a record-high of 47.6 in February, up from 44.6 last month.

IHS Markit, the global information provider which compiles the survey, said it is the highest index reading since the survey began 11 years ago.

The firm added that while the figure is below the neutral 50.0 mark, “indicative of financial health being under pressure”, the rise suggests that the conditions faced by UK households has become “less challenging” so far in 2020.

UK households also signalled “positive expectations” towards their financial health. The Future Household Finance Index, which measures expected change in financial health over the next 12 months, rose to 52.7 in February, from 49.6 in January.

IHS Markit said the level of optimism was at its highest since the data was first collected in February 2009, exceeding the previous peak seen in January 2015.

Joe Hayes, economist at IHS Markit, which compiles the survey, said: “Survey data are leading the way for information on the post-election and post-Brexit period in the UK, and our latest Household Finance report signals a number of developments that should keep the Bank of England doves at bay and build optimism towards the UK’s immediate economic prospects.”

“Living cost perceptions suggests that a further slowing of inflation in the UK is on the horizon. Household inflation expectations were also trimmed, which bodes well for near-term consumer spending prospects given that nominal wages are still robust.”

He added: “A key driving force in 2019, a continuation of this trend will be crucial in 2020 as well.”Housing market data were also upbeat, with current prices perceived to have risen strongly in February and expectations signalling further growth over the coming year.

“Less concern towards job security, which was heightened by various uncertainties last year, could also help stimulate demand. Post-election survey data so far scores a fairly good chance a first quarter GDP pickup following a flat end to 2019.”

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