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UK Consumer Confidence Edges Up in June But Uncertainty Remains

Consumer confidence in the U.K. increased slightly in June compared with the end of May but remained in deep negative territory, data from GfK showed Friday.

The GfK consumer-confidence barometer climbed to minus 30 in June, an increase of six points compared with minus 36 registered at the end of May. In early March, before the Covid-19-related shock hit the country’s economy, the indicator stood at minus 9.

The six-point uptick was driven by a strong increase in Britons’ outlook about their finances and the overall economic situation, but it is too early to say that consumers are moving on from the Covid-19 crisis, Joe Staton, GfK’s client strategy director, said in prepared remarks.

“This latest improvement may be misleading. Consumers appear to be confused and some are not sure what to think,” Mr. Staton said.

All five subindexes that form the barometer increased, data by the research institute showed.

Perceptions of consumers’ personal-financial situation and general economic situation over the coming year improved strongly, as well as the major purchase subindex, which gauges demand among shoppers.

Britons’ assessment of their personal-financial situation and the general economic situation over the last year also improved, but only fractionally.

“We have seen queues as some shoppers return to battered high streets. But with economists warning that the post-lockdown upturn might not restore Gross Domestic Product to pre Covid-19 levels and with the labor market set for more job losses, we have to question whether we are seeing early signs of economic recovery or that infamous ‘dead-cat bounce.’ Most bets will be on the dead cat,” Mr. Staton said. A dead-cat bounce is considered a short-lived recovery amid a downtrend.

Some 2,000 individuals were surveyed between June 1 and 11, days before some non-essential shops resumed business on June 15 for the first time since a nationwide lockdown was announced on March 23.

GfK’s barometer is usually published monthly but, since March, the report has been released at fortnightly intervals to evaluate the impact of the U.K.’s coronavirus crisis on consumer confidence. The next release is expected on July 3.
Source: Dow Jones

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