Britain’s fragile consumer recovery has stumbled. Confidence slipped in August as concerns about job security reached their weakest point in more than three years.
The S&P Global UK consumer sentiment index fell to 42.9, down from a four-month high of 43.4 in July. A reading below 50 signals broadly negative sentiment.
The decline comes despite recent signs of stronger economic growth. It highlights the difficulty the Government faces in turning an improving headline economy into greater confidence among households.
Maryam Baluch, an economist at S&P Global Market Intelligence, said the economy’s recent improvement was “failing to feed through to households”, with labour market concerns becoming an increasingly important drag on sentiment.
The survey’s job security index fell to 45.6, its lowest level since April 2023. It was the third consecutive month in which respondents reported worsening concerns about employment.
The figures come ahead of the latest official labour market data from the Office for National Statistics. That data is expected to provide further evidence of slowing recruitment and weakening vacancies.
Household finances offered a rare glimmer of relief. The relevant index edged up to 41.2, its highest level for five months, while private-sector employees reported some renewed optimism following months of uncertainty linked to geopolitical tensions and political instability.
Technology was the standout performer. S&P Global said AI-related investment was helping support employment and income growth in the sector, providing evidence that technology-focused industries are beginning to make a more visible contribution to the wider economy.
There were also tentative signs that expectations for the future are improving. Baluch pointed to a small “Burnham Bounce” in perceptions of future financial prospects, although she cautioned that expectations remained firmly negative overall.
Policymakers now face an uncomfortable combination. The economy is showing signs of recovery, but households remain reluctant to believe the improvement will translate into greater financial security.
For the Government, the widening gap between economic growth and consumer confidence could prove critical ahead of the autumn Budget.
