World Cup helps households feel happier about their finances
AN IMPROVING jobs market and the World Cup have helped households feel positive about their finances for the first time this year, research suggests.
The IHS Markit Household Finance Index rose to 44.6 in July, up from 43.6 in June, indicating that consumer budgets were feeling less squeezed.
IHS Markit suggested this was due to job security hitting a record high in the index at 50.2 while consumers were also less worried about inflation.
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The index also found optimism towards future financial expectations had risen for the first time since March 2016 at 51.3.
The data signalled a marked change in Bank of England interest rate expectations, with forecasts of a rate hike moving towards the near-term.
Almost 30 per cent of UK households anticipated an interest rate hike in the next three months, up from 22 per cent in June.
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Meanwhile around half of all survey respondents forecast a rate hike before the end of 2018.
“Despite looming Brexit negotiations, improving job security was reported for the first time since the survey began in 2009,” Sam Teague, economist at IHS Markit, said.
“Resilient employment perceptions, higher incomes and perhaps a World Cup boost led to a solid increase in spending activity during July.
“Meanwhile inflationary pressures eased to a 13-month low in July. Nonetheless, households shifted their interest rate rise expectations towards the near-term, with around half of respondents anticipating a Bank of England rate rise before the end of the year.”
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