Household confidence dipped last month as fears about job security mounted and as the housing market lost momentum, according to a report.
The Centre for Economics and Business Research and YouGov found that consumer confidence in Britain had fallen by 0.3 points to 112.9 in August, although that was still above the 100 mark that indicates optimism.
Concerns about the strength of the housing market weighed on confidence as homeowners felt that their properties had dropped in value. The sub-index for house prices over the past 30 days dropped by 2.6 points to 125.3. Although the housing market grew at a robust pace, there are signs that demand is cooling as the end of the stamp duty relief approaches.
Fears about job security worsened. Fewer than two million people are still on furlough, but economists do not expect unemployment to rise when the scheme ends at the end of this month. Vacancies have risen at a healthy pace recently and employers in many sectors are grappling with staff shortages. Nevertheless, the sub-index for job security fell by 1.6 points to 91.5, which indicates that people are, on balance, pessimistic about their job prospects.
Consumers are also worried that their personal finances will deteriorate. The sub-index for personal finances over the coming year fell by 0.3 to 101.5. Researchers attributed this to rising energy bills from October and the phasing out of the weekly £20 universal credit top-up.
However, business activity continues to improve as more companies reopen their offices. The metric increased by 0.7 points to 112.2 and the outlook for the year ahead also has risen by 0.9 points to 126.8.
Kay Neufeld, head of forecasting and though leadership at the Centre for Economics and Business Research, said: “The August reading of the consumer confidence index provides another mixed bag, confirming our view that consumer sentiment has topped out. Despite the small [decline] in confidence, it should be noted that the index remains close to multi-year highs. Overall, the latest reading . . . suggests that the UK economic recovery is still under way, though headwinds are emerging.”