In World Economy News 16/06/2016
U.K. households faced less financial strain in June, but they remained pessimistic regarding their year-ahead outlook for a third straight month, results of a monthly survey by Markit Economics and Ipsos MORI showed Wednesday.
The seasonally adjusted Household Finance Index (HFI) rose to 44.9 from a 22-month low of 42.3 in May. A reading below 50 suggests pessimism among households regarding their financial situation in the year ahead.
“Households’ financial projections were downbeat on average for the third month running – the longest sequence of pessimism since September
2014,” Markit economist Philip Leake said.
“When asked about monetary policy, the proportion of respondents expecting a rise in the base rate over the coming year rose back above 50 percent in June.”
However, expectations remained dovish compared to those seen at the start of the year, Leake added.
The modest improvement in households’ financial perceptions was due to faster growth of workplace activity and salaries. The highlight was a recovery in the financial well being of private sector workers.
Stable price pressures also contributed to the improved sentiment and household spending rose at the fastest pace in nearly a year. Job security concerns also eased since May.
A measure signaling the households’ expectations for finances in 12 months time was unchanged in June at 49.6. Pessimism was marked among public sector workers.
Inflation expectations were largely unchanged and some households brought forward their short-term interest rate expectations, the survey showed.
