September 17, 2018 / 12:14 AM / a month ago

UK consumers remain most upbeat since 2015: IHS Markit

LONDON (Reuters) - British households’ confidence about their financial situation held at its highest since 2015 this month, as their concern about inflation eased and they were relaxed about prospects for the year to come, a survey showed on Monday.

FILE PHOTO: Shoppers cross the road in Oxford Street, in London, Britain August 14, 2016. REUTERS/Peter Nicholls/File Photo

In contrast to business surveys — which often show worries about how Britain’s government will handle European Union withdrawal next March — household expectations for the year to come were the second-strongest since August 2016.

Overall, the IHS Markit Household Finance Index held unchanged at 45.9 in September, the strongest reading since a series high of 46.2 recorded in January 2015.

“UK households’ assessment of their current and future finances, despite ongoing Brexit uncertainty and sustained inflationary pressures, were relatively buoyant in September,” IHS Markit economist Joe Hayes said.

Separate figures from Visa, released slightly earlier on Monday, showed modest year-on-year growth in the volume of consumer spending for August, as Britons continued to make the most of an unusually warm summer.

The IHS Markit data did show some increased worries about employment prospects, unlike the picture painted by official data which records the lowest level of unemployment since 1975 and a record number of job vacancies.

Hayes said this was concentrated in manufacturing and was “likely reflective of the current ambiguity towards future customs arrangements with the EU”.

There is, so far, no full exit agreement between Brussels and London and some rebels in Prime Minister Theresa May’s Conservative Party have threatened to vote down a deal if she clinches one.

The IHS Markit survey showed 49 percent of people expect the Bank of England to raise interest rates in the next six months — up by 5 percentage points on the month — and 73 percent expect an increase within a year.

The BoE last raised rates in August, for only the second time since the global financial crisis, and most economists polled by Reuters do not expect rates to go up until after Brexit.

The IHS Markit data was based on a survey of 1,500 adults conducted by market research company Ipsos MORI between Sept. 6 and Sept. 10.

Reporting by David Milliken, editing by Andy Bruce

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