Consumer confidence is now at its highest level since PricewaterhouseCoopers started the Consumer Sentiment Index back in 2008. A significant improvement to +8 on the consumer confidence index reveals many consumers have more disposable income and a pent up demand to spend after a year of lockdown restrictions.
Improvements in consumer confidence have been seen across all demographic groups and all UK regions with the over-65s demographic driving the increase. The only age group to be more confident is the under-35s who are historically the most optimistic.
The vaccination rollout is partly responsible for optimism among the older age categories. At the time of the survey, the over-65s and many over-55s would have been offered at least a first vaccine and these groups were noticeably more positive than those aged 45-54, a reversal of what we saw in January. Furthermore, the older age groups are least financially affected by lockdown, as measured in Nov 2020, seeing no negative financial impact and over a quarter of over-65s, 28%, have saved money during the pandemic.
While optimism has recovered across all age groups, those under-45 are less positive than they were two years ago in March 2019, indicating that they have been hit hardest by the effects of the pandemic and lockdown restrictions.
Consumer spending intentions have changed dramatically as we head out of lockdown. For the first time every category has seen an increase in their intention to spend since January, except groceries which remains essentially unchanged. This is in contrast to previous sentiment, following the Brexit referendum and the financial crisis, where consumers expected to spend more on groceries, and occasionally on home improvements and holidays, with everything else net negative.
The biggest increases have been in leisure and fashion. In leisure, the people expecting to spend more outnumber those expecting to spend less by three to one. There is clearly a pent-up demand to go out once restrictions allow, with never before seen net spending intentions in leisure of between +25 and+32% compared with between -7 and -16 just two months ago.
For fashion, that ratio is two to one in favour of spending more. Other shopping categories however are more evenly split. Consumers are prepared to spend on ‘fun purchases’ that they haven’t had the chance to over recent months.
With uncertainty remaining over easing of restrictions and the reopening of national borders, holidays have slipped behind restaurants in the top three reopening activities that consumers are most looking forward to.
Lisa Hooker, consumer markets lead at PwC, said;