Less squeeze for UK households: Markit
By David Milliken, Reuters
October 23, 2012, 12:01 am TWN
LONDON--The downturn in Britons' personal finances appeared to be bottoming out in October, with the smallest deterioration in almost two years, research company Markit said on Monday.
The Household Finance Index rose to 39.0 in October from 38.4 in the previous month, reaching its highest level since December 2010, Markit said.
However, the current level still indicates that many more people experienced a worsening in their situation than an improvement.
Household finances were supported by stable employment income in October, alongside a reduced squeeze on cash availability and the most marked drop in debt levels for just over two years.
But households' optimism about the future took a sharp knock, dropping to its lowest so far this year, and perceptions of inflation were their highest since September last year, when inflation hit a three-year high of 5.2 percent.
By contrast, inflation last month dropped to its lowest in more than two years at 2.2 percent, and official data earlier this week also showed the highest number of people in work since records began in 1971.
“While pressures on current finances were reported to have moderated again, helped by stabilizing incomes and lower debt, the steep reversal in future sentiment is a clear signal that households are likely to keep a tight rein on spending in the months ahead,” said Markit economist Tim Moore.
“Any rebound in Q3 GDP may conceal underlying economic fragilities moving into the final months of 2012,” he added.