The June economic outlook once again proved to be disappointing for the average household. Lower wages, higher prices and higher debt.
Survey compiler Markit announced that its headline Household Finance Index (for the UK) for June rose to 37.0 from a four-month low of 36.6 in May, but remained well below the 50 level necessary for no change in finances compared the previous month.
It has remained negative ever since February 2009 with the effect that June saw the worsening of the financial situation of around one third of the respondents as compared to the improvement of only one tenth.
Over the next 12 months, the index measuring households’ expectations for their finances rose to 42.8 in June. This is the highest since April 2010. Tim Moore, a senior economist at Markit commented on the relief factor provided by lower inflation to UK household finances in the month of June. However, householders are wary of the deteriorating global situation in June and are facing the harsh reality of a greater drop in income from employment. Hence it will take much more than an inflation- drop to carry this bit of relief through the remainder of 2012.
Falling Inflation Brings Hope
Britons have hardly been optimistic about the U.K Economic Outlook for the past two years, but as Inflation is slowing down (i.e. Disinflation) , they have shown a ray of hope in the month of June. It comes as a little relief, that economically robust consumers will contribute to lifting the slumping financial system.
This was primarily attributed to the fall in inflation as the Consumer Price Index fell to 2.8 percent in the month of May. This was its lowest level of Inflation in two and a half years. The central bank feels that consumers’ spending will increase if the rate prices are rising is slowed down,. This will play an important role in improving the economic situation as the export and business sector have been affected by the debt crisis in the neighboring euro zone.
Rising Jobs Index
The job index reached the second highest level since April 2010. This has also brought the Britons some relief on the Employment front. A survey of 1500 people conducted between June 13 and June 18 revealed that the number of households that felt insecure about their jobs were twice as high as those who felt the situation was better than during the previous month. Out of the above, those working in the construction line headed the list. Employees working in the manufacturing sector were a close second. About fifty one percent of the public sector workers were more insecure about the position of their finances in 2013 as compared to thirty nine percent of their counterparts in the private sector.
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