Consumer confidence has rebounded to pre-pandemic levels, shows recent figures, marking a significant milestone and reflecting an improving economic environment for consumers
According to the latest Deloitte Consumer Tracker, based on responses from 3,200 UK consumers aged 18+ between 6 and 8 September 2024, UK consumer confidence rose 1.7 percentage points in the third quarter of 2024. All six measures of the index improved in Q3 2024, marking the eighth consecutive quarter of improvement to consumer confidence, taking it to its highest level since before the pandemic.
The improvement is in part due to a significant increase in consumer sentiment towards children’s education and welfare, up five percentage points to its highest level since Q3 2016, following the introduction of the government’s free childcare offering.
Meanwhile, there was also a significant rise in sentiment towards job opportunities and career progression, which saw a two-percentage point increase to its highest level since the second quarter of 2019. At the same time, consumers are feeling slightly more positive about their job security, up 0.5 percentage points in Q3, as the labour market remains strong.
Céline Fenech, consumer insights lead at Deloitte, said, “Consumer confidence has rebounded to pre-pandemic levels, marking a significant milestone and reflecting an improving economic environment for consumers. This is driven in part by growing optimism about personal circumstances, bolstered by a strong labour market that instils confidence in job security and career opportunities.”
Consumer confidence towards the state of the UK economy dropped by five percentage points in Q3 2024 as consumers await the outcome of the upcoming Autumn Budget. However, this remains 20 percentage points higher than the same period a year ago.
Consumer sentiment around their level of debt improved marginally (+0.8) in Q3 following the first cut to interest rates in August. Consumers have also been focusing on paying off debts, with fewer consumers (18 per cent) saying they saw an increase in their debts in the last three months compared to the previous quarter (21 per cent).
Ian Stewart, chief economist at Deloitte, said, “The Bank’s interest rate decision in August was a significant moment, marking the first cut in four years. This, along with inflation now falling below the two percent target, and growth in real income, paints a more positive picture for a consumer sector which has been hit hard by high inflation and interest rates.
"While consumer sentiment about the economy edged lower this quarter, the overall mood is of cautious optimism among UK consumers.”
