Pressure on UK household finances eases in July, but spending remains very subdued - IHS Markit

According to the report from IHS Markit, at 41.5 in July, up from 40.7 in June, the headline seasonally adjusted IHS Markit UK Household Finance Index (HFI) – which measures households’ overall perceptions of financial wellbeing – reached its highest level since March.

While any reading below 50.0 is indicative of an overall squeeze on household finances, the latest figure highlighted a continued turnaround from the eight-and-a-half year low seen in April (index at 34.9). Moreover, the headline index was broadly in line with its long run average of 41.2. 

The phased reopening across parts of the UK economy appears to have been a factor supporting household finances in July, with this leading to a slightly improved situation for income from employment and workplace activity in comparison those recorded during the lockdown period. However, households' financial outlook for the next 12 months was one of the few survey measures to worsen since June, with this index dipping from 45.9 to 42.5 in July. As recently as February, financial wellbeing expectations had been at a  survey record high of 52.7. This sharp reversal of household sentiment has been overwhelmingly driven by pessimism about job security. Nearly four times as many survey respondents (31%) reported a decline in job security during July as those that indicated an improvement (8%).