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British consumer confidence surpassed pre-pandemic levels for the second month in a row, as people continued to spend their pent-up cash on beauty, clothes and hospitality during the midsummer months.
Data from research company GfK released on Friday showed the consumer index was minus 8 in August, a marginal fallback from minus 7 in July but still higher than January 2020 levels.
Joe Staton, client strategy director at GfK, said “expectations for our personal financial situation for the coming 12 months are holding up,” adding “this positivity bodes well for the economy this year and next.”
People’s outlook for the year ahead remained unchanged from July, at 11, its highest level since 2007, and well above the minus 0.5 average for 2008-2019.
The results of the survey, which tracks consumers’ sureness in their personal finances, came in slightly under those forecast by economists polled by Reuters, who predicted no change on July levels.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the high number of Covid-19 cases earlier in the summer had “prevented sentiment from improving further.”
In general, the survey, conducted between August 1 and 12, suggested consumers felt in a good position to spend the savings they had accumulated during the long months of lockdown.
Following remaining restrictions for most businesses were lifted on July, spending appetite was strong despite lingering uncertainties around the persisting health crisis.
As gross domestic product continued to bounce back, Staton said that, overall, the economic health of the nation looked “good for the remainder of 2021”.
Lisa Hooker, consumer markets leader at PwC UK, which also reported positive sentiment towards spending in its latest findings, said: “[The] high level of consumer confidence across all age categories was driven by the success of the vaccine rollout.”
Hooker said she expected enthusiasm for shopping to continue driven by the beauty and fashion retail sectors spurred by the return of mass gatherings.
“The return of social events such as weddings, albeit on a smaller scale, gives people a reason to shop, and will be positive for spending on clothing apparel and beauty, two of the hardest hit categories through lockdown.”
The consumption of households accounted for 4.1 percentage points of the 4.8 per cent gain in UK GDP in the second quarter, according to official data released earlier in the month.
Despite the strong signs of growth, consumption across the UK was still well below pre-pandemic levels in the second quarter suggesting further room for economic expansion.
Consumer confidence is closely monitored by economists as a measure of people’s sense of job security, which could affect how confident they feel spending versus saving.
“There are compelling reasons here to be cheerful as we begin to put the hardest pandemic months behind us,” said Staton.