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British households have seen the strongest growth rate in earnings from employment in the past decade, triggering a growth in consumer sentiment for the first time in months, a financial data firm said.
IHS Markit, a financial data firm, said households’ overall perceptions of financial wellbeing rose to a three-month high of 44.0 in April, from 43.4 during March, therefore signalling a weaker degree of pessimism among UK households.
This was spurred by stronger growth in earnings from employment, while job security perceptions also stabilised amid a pick-up in workplace activity.
In fact, the rate of growth in earnings was the strongest seen since data collection started in 2009. Additionally, overall job security perceptions broadly stabilised during April, with the respective index posting only fractionally below the neutral 50.0 value.
According to IHS, the overall stabilisation in labour market sentiment was supported by a faster rise in workplace activity. In tandem with stronger earnings, expectations towards future financial wellbeing were their least downbeat since last November.
Although faster growth of income from employment and a stable outlook towards job security helped drive greater spending in April, IHS revealed that the appetite for major purchases – such as cars and holidays – declined markedly and at a rate that was only slightly slower than seen in March.
"Overall, April data suggest the downbeat consumer sentiment story in the UK could turnaround in the coming months if trends in wages and job security remain accommodative, helping to drive domestic expenditure," Joe Hayes, economist at IHS Markit, said.
The survey is based on monthly responses from about 1,500 individuals in Great Britain, with data collected by Ipsos MORI from its panel of respondents aged 18-64.