Consumer confidence and private sector growth in the UK have both seen a decline, according to separate surveys by Deloitte and the Confederation of Business Industries (CBI).
The Consumer Tracker report by Deloitte published on Monday (30 January, 2017) said overall confidence of consumers in the UK fell in the fourth quarter of 2016 by one percentage point, compared to the previous quarter. The latest reading came in at -5% as against -6% seen in the third quarter. The reading was, however, higher when compared year-on-year.
The quarterly survey of 3,000 consumers further revealed that five out of the six measures that make up the index saw growth when compared to Q4 2015. While consumers remained confident about the outlook for jobs, their view of career progression and job security remained unchanged.
One of the biggest highlights of the survey was that consumer confidence among 18 to 34 year-olds was at record highs, led by growing confidence around disposable income and debt.
Ian Stewart, chief economist at Deloitte, said in a statement: "So far, Brexit has not dented consumers' confidence about the outlook for jobs, particularly among younger workers. Rising real wages, credit growth, high employment and rather more positive business confidence have bolstered consumer spirits and have kept consumer confidence levels stable, and higher than 12 months previously."
However, on the downside, the survey pointed out that inflation continued to rise. This, along with other factors such as rising costs of goods and services, Deloitte said, would affect consumer confidence going forward.
"Falling confidence about disposable income may be a sign that we are seeing the start of a squeeze on household incomes. Rising inflation, largely driven by the weakening pound in recent months, will also put pressure on real incomes and consumer spending in 2017," Stewart said.
The CBI Growth Indicator which surveyed 753 companies showed that growth in Britain's private sector eased in the three months to January. The reading came in at +10, down from the +17 seen in the three months to December. The CBI too warned that inflation was on the rise and could have a negative effect on private sector growth.
CBI chief economist Rain Newton-Smith was cited by Reuters as saying: "Resilience has been the hallmark of the UK economy since the EU referendum...But higher inflation is on the way, which will erode consumer incomes, while the impact of uncertainty since the (Brexit) referendum may cause investment spending to slow this year."