Household finances still under pressure in August - Markit
UK households were a little less downbeat about their finances in August, according to the latest survey from IHS and Ipsos, although they continued to expect a deterioration over the next 12 months.
Markit's seasonally-adjusted household finance index rose to 43.5 from July's three-year low of 41.6, but remained below the 50.0 no-change threshold. The survey found that cost pressures were still a key factor behind the fall in financial wellbeing, with respondents reporting a sharp rise in prices for goods and services.
Meanwhile, expectations for future finances rose to a four-month high. The seasonally-adjusted index edged up to 47.2 from 47.1 in July. Still, it remained below the 50.0 no change threshold, suggesting that households expected deterioration in their finances over the next year.
IHS economist Sam Teague said: "Despite easing slightly since the three-year peak previously recorded, UK households continued to face a sharp budget squeeze in August, driven by sustained inflation and weak pay growth.
“Households continued to report a greater need for unsecured borrowing to bridge the gap between pay growth and inflation. The sharp drop in the number of people expecting a Bank of England base rate rise in the near future provides an indication that households expect lending conditions to remain accommodative."
Respondents noted the lowest level of job insecurity since December 2015, signalling that labour market conditions have continued to improve this summer.