Results from a recent survey show that almost 42% of households expect that their finances will have deteriorated in one year's time with only 24% forecasting an improvement.
The survey, carried out by leading financial information company Markit, helps create the Markit Household Finance Index (HFI) which is compiled monthly and gauges sentiment regarding household finances in the UK.
Key points from November survey
- Household finances worsened at a much faster pace than in the previous month
- Appetite for major purchases is the weakest recorded in 2013
- Current inflation perceptions hit a six-month high
- Workplace activity rises again, albeit at slower rate than in October
Current finances
At 38.8 in November, down from 41.0 in the previous month, the headline HFI was the lowest since April and well below the neutral value of 50.0. Around four times as many households (29%) reported a deterioration in their finances in November as those that saw an improvement (7%).
Expectations for finances in the next 12 months
November data signalled a worsening outlook for financial wellbeing over the next 12 months. Almost 42% of households expect that their finances will have deteriorated in one year's time with only 24% forecasting an improvement.
Cash availability and appetite for spending
Households reported a tighter squeeze on their cash available to spend during November which contributed to the most marked drop in savings seen so far in 2013. Reduced savings and falling cash availability continued to dampen households' appetite for major purchases in November.
Job security, workplace activity and incomes
The survey provided a positive signal for the UK labour market as workplace activity increased for the tenth successive month. Job security was broadly unchanged from the previous month and still close the survey high recorded in September. Despite rising workplace activity, incomes from employment dipped slightly in November.
Current and future inflation perceptions
November data showed that households' current inflation perceptions increased for the second month running. At 83.5 up from 82.5 in October the index measuring current inflation perceptions was the highest since May.
