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Markit: Household finances continue to be squeezed

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by Kay Mitchell
”Markit:

The Markit Household Finance Index (HFI) has today published a gloomy report as families’ finances were slightly worse in October than in September.

Meanwhile, Markit’s HFI, which measures prospects for finances over the coming year, dived to 34.5 this month, from September’s reading of 42.2.

The reading represented the lowest in the survey’s history and remains way below the 50 level which separates improvement from a deterioration in household finances.

Meanwhile the index which measures current finances dipped to 35.0 in October from 35.1 in September – also below the crucial 50 mark.

Tim Moore, senior economist at Markit, comments: “Household finances were once again gripped in a vice of subdued real incomes and heightened job insecurity in October.

“Households also expect a continued erosion of their real incomes next year, despite inflation expectations falling back slightly in October.”

The Coalition Government is in the midst of harsh spending cuts and tax hikes, in order to slash the budget deficit and state workers are particularly worried about their prospects.

Almost two-thirds of public sector workers expect their household finances to deteriorate in one year’s time, with this index plunging to 27.4 in October from September’s reading of 37.9 – the lowest since the survey commenced in February 2009.

Meanwhile, households with a mortgage were pessimistic about the outlook for their finances, with 59% expecting them to deteriorate.

The job security measure fell at the steepest rate in three months and inflation expectations edged lower to 87.3 in October from 90.0 the previous month.

Britons are already suffering from the worst squeeze in living standards in more than three decades as stubbornly high inflation, tax hikes, unemployment and low wage growth eats into families’ budgets.

Inflation is currently running at a 3-year high, while unemployment is at a 17-year high.

The Markit survey comes days after the Nationwide Building Society revealed a fall in UK consumer confidence for the month of September.

The building society’s consumer confidence index fell for the fourth consecutive month, falling by 3 points to 45 in September – hovering dangerously close to the all-time low of 41.

According to the survey, 80% of consumers believe there will be no improvement in the economy over the next six months.

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News posted: October 24, 2011

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