Britons' gloom about future finances eases
LONDON (Reuters) - Britons' pessimism about their future finances eased in June to signal the least downbeat outlook in more than two years as inflation slowed, lending support to policymakers' hopes that hardy consumers will keep the recession-hit economy afloat.
Survey compiler Markit said on Monday that its headline Household Finance Index ticked up to 37.0 from the four-month low of 36.6 plumbed in May, but remained well below the 50 level that would mark no change in finances compared to a month ago.
Around one-third of respondents said their financial situation had worsened in June, while less than a 10th reported an improvement.
The index measuring households' expectations for their finances over the next 12 months rose to 42.8 in June - the highest since April 2010.
"Lower inflation provided some relief to UK household finances in June," said Tim Moore, a senior economist at Markit.
"However...it will take much more than a dip in inflation to carry this resilience through the second half of 2012. A worsening global economic backdrop in June, alongside reports of a greater drop in income from employment, continued to keep the pressure on household finances."
Consumer price inflation fell to 2.8 percent in May, its lowest in two and a half years. The central bank hopes that slower price rises will boost consumer spending - a vital engine of the economy, given that exports and business morale have taken a hit from a debt crisis in the neighbouring euro zone.
Britons' worries about their jobs also abated, with the relevant index reaching the second-highest level since April 2010. Nonetheless, more than twice as many households still thought their jobs were less secure than a month ago as those who felt more confident.
People working in construction were the most worried about keeping their jobs, followed by manufacturing employees.
Fortunes also differed between the private and the public sectors: 51 percent of public-sector workers expected their finances to deteriorate in the year ahead, compared to 39 percent of private-sector employees.
The survey of 1,500 people was conducted from June 13 to June 18.
(Reporting by Olesya Dmitracova; editing by Ron Askew)
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