Mar 16, 2016 - interest rates before March 2017 ... savings and cash available to spend continued to ... (45%) expect hi
News Release th
EMBARGOED UNTIL: 09:30 (London / UTC) March 16 2016
Markit Household Finance Index™ (HFI™) – United Kingdom Financial outlook strongest since January 2015, helped by muted inflation perceptions Key points for March 2016: Optimism about year-ahead picks up to 14-month high Current financial strain remains relatively weak Inflation perceptions still well below series trend Workplace activity rises further, but income from employment falls for first time since late-2014 Less than half of households forecast higher interest rates before March 2017
trend seen across the first quarter as a whole (44.7) was the highest since Q2 2015. Among the eight job sectors covered by the survey, only finance/business services registered an outright improvement in financial wellbeing. That marked a four-month period of growth in the sector – a survey-record for any category. The financial strain was broad-based by region in March, with households in the North East the most downbeat. Those based in the Midlands reported the weakest financial pressures.
This release contains the March findings from the Markit Household Finance Index™ (HFI™), which is intended to anticipate changing consumer behaviour accurately. The HFI is compiled each month by Markit, using data collected by Ipsos MORI.
Ongoing growth of workplace activity and sustained low inflation perceptions ensured that the financial squeeze remained muted in March. However, lower savings and cash available to spend continued to weigh down finances. Furthermore, households reported the first reduction in income from employment since December 2014.
Current finances
Expectations for finances in the next 12 months
Data collected March 9-13th 2016.
Source: Markit
Source: Markit
Financial pressures remained relatively subdued in March, according to latest data collected from UK households. Though falling slightly from 45.3 in February to 44.8, the seasonally adjusted Markit UK Household Finance Index (HFI) was well above its long-run average (39.8). Moreover, the
UK households signalled optimism towards the yearahead for the second straight month in March. The seasonally adjusted index measuring the outlook for financial wellbeing over the next 12 months ticked up to a 14-month high of 51.5, from 50.5 in February. Positive sentiment was reported in both
Page 1 of 3
© Markit 2016
the private and public sectors, with workers in the former the most upbeat since the start of 2015 (index at 57.6).
Comment:
Workplace activity, job security and incomes
“Markit’s HFI survey pointed to a relatively muted financial squeeze in March. Growth of workplace activity and subdued inflation perceptions helped to limit pressure on finances. As a result, households signalled the brightest financial outlook in 14 months.
For the forty-sixth month in a row, workplace activity increased in March. That said, the rate of growth eased since February and was slower than the average over the current sequence. Income from employment fell for the first time since the end of 2014 during March. The latest drop marked the end of the longest sequence of salary growth since the survey began in early-2009 (14 months). Worries about job security were again reported by UK households in March. The respective index was the joint-lowest in two years. Current and future inflation perceptions After adjusting for seasonality, the index measuring current inflation perceptions was at a sevenmonth high (63.4) in March. However, it continued to point to historically low price pressures. The index for expected living costs over the year ahead followed the same trend, rising to its highest since last August but still signalling relatively muted inflation expectations. Households’ views on next move in Bank of England base rate
Philip Leake, economist compiles the survey, said:
at
Markit,
which
“However, there were one or two warning lights flagged by the latest data. Income from employment dropped for the first time since the end of 2014, while savings and cash available to spend fell further. With fresh public spending cuts expected in today’s budget announcement, headwinds to household confidence are likely to persist in coming months. “Looking at expectations for interest rates, households remained dovish in March. Less than half of respondents forecast a base rate rise in the coming year. Interestingly, around 10% expect interest rates to be cut next rather than raised – the highest proportion ever recorded by the survey.” Households’ views on next move in Bank of England base rate*
UK households maintained a dovish stance towards Bank of England monetary policy during March, with expectations of the next interest rate rise broadly similar to February. Once again, less than half of monitored households (45%) expect higher interest rates over the next year. This was the lowest proportion since November 2013. Meanwhile, the proportion of respondents forecasting an increase in the base rate within the next three months was unchanged since February (9%). The percentage dropped slightly when looking at the next six months (from 22% to 19% in March), and was the lowest since August 2013. Notably, one-in-ten panellists anticipate the next move in the Bank of England base rate to be a cut. This was the highest proportion in more than twoand-a-half years of data collection.
* “The interest rate set by the Bank of England is currently 0.5%. Please let us know when and how you think the Bank will next change interest rates by choosing one of the options below: Please choose one answer.” Historical data available upon request. Source: Markit
-EndsPage 2 of 3
© Markit 2016
For further information, please contact: Markit Philip Leake, Economist Telephone +44 1491 461014 Email
[email protected]
Joanna Vickers, Corporate Communications Telephone +44207 260 2234 E-mail
[email protected]
Note to Editors: About the HFI 1 The HFI is a “diffusion index”, which is calculated by adding together the percentage of respondents that reported an improvement plus half of the percentage that reported no change. The resulting index varies around the 50.0 “no-change” level, with readings above 50.0 signalling an improvement and readings below 50.0 a deterioration. The headline survey indices have been seasonally adjusted using the US Bureau of the Census X-12 programme. Markit do not revise underlying (unadjusted) survey data after first publication. The Household Finance IndexTM (HFITM) survey was first conducted in February 2009 and is compiled each month by Markit. The survey methodology has been designed by Markit to complement the Purchasing Managers’ Index® (PMI®) business surveys, which are closely watched due to their timeliness and accuracy in anticipating changing business conditions. The HFI is intended to accurately anticipate changing consumer behaviour. Like the PMI surveys, the HFI tracks objective “hard data” on actual month-on-month changes, focusing on household spending, saving and debt levels, but also includes several forward-looking opinion questions to help anticipate future trends. In a further similarity to the PMI survey methodology, the questionnaire is designed to be quick and easy to complete, incorporating a small number of key questions, which encourages regular participation among even high-level respondents. The survey is based on monthly responses from approximately 1,500 individuals in Great Britain, with data collected by Ipsos MORI from its panel of respondents aged 18-64. The survey sample is structured according to gender, region and age to ensure the survey results accurately reflect the true composition of the population. Results are also weighted to further improve representativeness. Prior to September 2010, the Household Finance Index was jointly compiled by YouGov and Markit based on monthly responses from over 2,000 UK households, with data collected online by YouGov plc from its representative panel of respondents aged 18 and above. The panel was structured according to income, region and age to ensure the survey results accurately reflected the true composition of the UK population. Results were also weighted to further improve representativeness. Index numbers Index numbers are calculated from the percentages of respondents reporting an improvement, no change or decline. These indices vary between 0 and 100 with readings of exactly 50.0 signalling no change on the previous month. Readings above 50.0 signal an increase or improvement; readings below 50.0 signal a decline or deterioration. Ipsos MORI technical details (March survey) Ipsos MORI interviewed 1500 adults aged 18-64 across Great Britain from its online panel of respondents. Interviews were conducted online between March 9th – 13th 2016. A representative sample of adults was interviewed with quota controls set by gender, age and region and the resultant survey data weighted to the known GB profile of this audience by gender, age, region and household income. Ipsos MORI was responsible for the fieldwork and data collection only and not responsible for the analysis, reporting or interpretation of the survey results. About Markit Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ over 4,000 people in 11 countries. Markit shares are listed on Nasdaq under the symbol MRKT. For more information, please see www.markit.com.
The intellectual property rights to the HFI provided herein is owned by Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Household Finance Index and HFI are trade marks of Markit Economics Limited. Markit and the Markit logo are registered trade marks of Markit Group Limited.
Page 3 of 3
© Markit 2016
