UK consumer confidence gets a boost but is it a ‘dead-cat bounce’?

Consumer confidence in the UK economy increased six points to -30 in June, according to GfK’s latest consumer confidence barometer, with particularly strong increases in measures for future perceptions of personal finances and the economy.

The index measuring changes in personal finances during the last 12 months is up one point to -9, which is eight points lower than June 2019. The forecast for personal finances over the next 12 months is up six points to -4, which is six points lower than June 2019.

The measure for the general economic situation of the country during the last 12 months has improved by one point to -59; this is 27 points lower than in June 2019.

Expectations for the general economic situation over the coming 12 months are up by nine points at -48, which is 15 points lower than June 2019.

The major purchase index, which measures whether people think it is a good time to make major purchases such as furniture and electrical goods, has increased nine points to -32 in June, 30 points lower than it was in June 2019.

Showing that consumers are increasingly thinking it is a good time to save, the savings index improved by four points in June to 16, which is three points lower than at this time last year.

GfK’s client strategy director Joe Staton questions whether we are seeing early signs of economic recovery or a ‘dead cat bounce’.

“Are we progressing out of the worst effects of the COVID-19 epidemic? Our first survey after lockdown saw our Major Purchase measure come in at a depressing -52 but today it has recovered to stand at -32. So far so good,” Staton says. “But while Britain’s high streets are busier and the six-point improvement in the core consumer confidence measure over the past two weeks is welcome, there’s no room for complacency.

“Yes, it’s the first time we have recorded a six-point jump since September 2016. But will this quickly translate into a better economy that marketers can get their teeth into? Unlikely. The truth is we know confidence has taken a battering and it will take many months to count the cost.

“Most bets will be on the dead cat.”