UK consumer sentiment improves modestly in May
By Josh White
Date: Monday 19 May 2025
(Sharecast News) - UK consumer sentiment improved modestly in May, supported by stronger job security and rising incomes, though overall confidence remained firmly negative, according to S&P Global's latest consumer sentiment index (CSI).
The index rose to 45.2 from 44.5 in April, marking a second consecutive monthly gain but remaining below the neutral 50 mark, indicating continued overall pessimism.
S&P said the labour market continued to be the most resilient aspect of household sentiment, with job security reaching its highest level so far in 2025.
Confidence was notably higher among private sector workers, while public sector employees remained more cautious.
Incomes from employment rose for a fifth month, reaching a five-month high and extending a run of salary growth that has lasted over two years.
Households reported a slower deterioration in their current financial wellbeing, while expectations for future financial health improved to the highest level since February.
Optimism was concentrated among higher-income groups and private sector employees, while lower-income households remained downbeat, though less so than in April.
Spending remained subdued, with households continuing to reduce consumption and draw on savings.
However, the pace of savings depletion and cash flow pressures eased slightly.
Attitudes toward large purchases improved marginally but remained weak.
Debt levels rose slightly in May, continuing April's trend, while demand for unsecured loans increased at the slowest pace in three months.
Access to such loans worsened, with availability falling to its lowest level since August 2024.
For the first time in three months, more households now expected the Bank of England's next move to be a rate cut rather than a hike, with dovish sentiment reaching its strongest level since last November.
The survey, conducted from 8 to 12 May, partially reflected expectations ahead of the Bank's policy decision that took place during the same period.
"UK households remained resolutely downbeat in May, though the level of financial pessimism eased compared to April and has now even risen above the survey's long-run average," said Maryam Baluch, economist at S&P Global Market Intelligence.
"Encouragingly, households are feeling secure in their roles for the first time so far this year, perhaps in a sign that concerns over lay-offs relating to higher NI contributions and other wage-related measures reported in last year's Budget have calmed, now that the higher rates have taken effect.
"The main drag on sentiment instead came from consumer spending behaviour."
Baluch said households were cautious with their spending due to limited cash availability, which hindered major purchases, although rising incomes eased some financial strain.
"In fact, households reported a softer deterioration in their current financial well-being and were less downbeat about their financial prospects.
"A change in May is that, on balance, households adopted a dovish view on central bank policy."
That marked the first time since February that more households expected interest rate cuts rather than an increase, Maryam Baluch noted.
"It is hoped additional easing of monetary policy will stimulate household expenditure and alleviate difficulties in obtaining loans, with many big lenders already aligning their products with the latest policy adjustments."
Reporting by Josh White for Sharecast.com.
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