Q2 2016
The Deloitte Consumer Tracker
Confidence remains flat but job
worries cloud outlook
Deloitte’s latest Consumer Tracker
shows that consumer confidence
in job security has fallen three
points in the immediate aftermath
of the EU referendum, and is down
six points compared to this time
last year.
Confidence in job opportunities
has also fallen since last quarter,
showing consumers feel less
certain about their job prospects
as the consequences of Brexit
continue to unfold. Overall, our
headline measure of consumer
confidence remains at -8, its
lowest level since Q4 2014.
When asked how the result of
the EU referendum would impact
upon their personal financial
situation and spending habits in
the next 12 months, consumers’
response was strongly negative.
Consumers are also concerned
about the affordability of their
grocery and non-essential
spending. Post-Brexit inflation
forecasts predict a rise in the next
year. The Treasury recently raised
its forecast to an average of 1.3%
inflation for 2016, up from 0.5% in
June, and to 2.5% in 2017.
Sentiment about jobs among
younger consumers is more
negative than for older
consumers. While overall
confidence is flat quarter-onquarter for 18-34 year olds due
to an 18 point rise in health and
well-being, their confidence about
job security falls by seven points,
and confidence in their career
progression by nine points.
Consumer spending remains
largely stable. Expenditure
continues to shift from essentials
to discretionary categories. Net
spending on essentials was
flat quarter-on-quarter, while
net spending on discretionary
categories rose by three points,
suggesting more consumers are
spending more in non-essential
areas. This is reflected in retail
sales growth of 2% in the first
half of the year. However, leisure
spending continues to grow at a
faster rate than retail spending,
as consumers prioritise spending
on experiences.
It remains to be seen what impact
political and economic uncertainty
will have on the consumer
market. Consumer-focused
economic fundamentals remain
favourable – for example, inflation,
unemployment and the cost of
borrowing are still all low – but for
how much longer?
Consumers expect to spend more
in most categories in the next
three months, but beyond then
their outlook is more cautious.
Significantly, it is consumers
in the higher social grades as
well as younger consumers that
are reporting lower levels of
confidence for the next 12 months
across a range of measures
relating to their personal finances.
Key indicators
Overall
consumer
confidence
(q/q)*
Confidence
in level of
job security
(q/q)*
Essentials
spending
(y/y)*
Previous
-8%
-8%
Latest
Previous
-7%
-10%
Latest
Previous
+5%
+5%
Latest
Discretionary
spending
(y/y)*
Previous
-5%
-3%
Latest
ONS retail
sales value
growth
June-16 (y/y)
Previous
+1.3%
+1.8%
Latest
Previous
CPI inflation
June-16 (y/y)
+0.0%
+0.5%
Latest
*Net balances
Authors
Ben Perkins
Head of Research
Consumer & Industrial Products
020 7307 2207
beperkins@deloitte.co.uk
Aino Tan
Research Manager
Consumer & Industrial Products
020 7007 4406
aintan@deloitte.co.uk
Rebecca Thomson
Research Manager
Consumer & Industrial Products
020 7007 0891
rebthomson@deloitte.co.uk
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Consumer confidence
Overall consumer confidence was flat
Consumers reported feeling less
Chart 1. Consumer sentiment about job security
Net % of UK consumers who said their level of confidence in job security has improved
confident about the security of their
over the past three months
jobs in the immediate aftermath of
the EU referendum. The confidence
0%
readings fell three points from the
-4%
previous quarter and is now down six
points compared to this time last year. -8%
-12%
Unemployment data up to May 2016
-16%
shows the unemployment rate in
-20%
the UK has continued to fall over the
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
past year, reaching its lowest level
11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
since 2005. This indicates that while
consumers are clearly concerned
about jobs, these concerns are not yet
being reflected by the official statistics.
Chart 2. UK consumer sentiment about personal situation
Net % of consumers who said their level of confidence has improved in the past three months
-40%
Q2 2012
Overall consumer confidence was
flat at -8, its lowest level since 2014.
-2%
0%
2%
1%
-4%
-11%
-7%
-4%
-4%
-10%
Your children’s
education
and welfare
-36%
-30%
Your job
security
-29%
-20%
-3%
-5%
-7%
-10%
Your general
Your job
health and opportunities/
wellbeing
career
progression
-12%
-10%
-8%
-5%
-4%
-1%
0%
Your level
of debt
-13%
-8%
-5%
-12%
-11%
Your
household
disposable
income
-15%
10%
-18%
-15%
-14%
Three of the six measures of
confidence fell compared to the
same time last year. Confidence in
job security, career opportunities
and progression, and children’s
education and welfare all fell.
Confidence in disposable income,
level of debt, and health and
well-being all rose.
Q2 2013
Q2 2014
Q2 2015
Q2 2016
Chart 3. Deloitte consumer confidence
Net % of consumers who said their level of confidence has improved in the past three months
0%
-4%
-8%
-12%
-16%
-20%
2
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Consumer confidence
Confidence among high earners falls significantly
Sentiment about job security was
significantly lower for younger
consumers than it was for older
consumers. It fell by seven points
compared to the previous quarter
for 18-34 year olds, but remained
flat for those aged 55 and over.
Chart 4. Consumer sentiment about job security by age group
Net % of consumers who said their level of confidence has improved in the past three months
10%
0%
-10%
-20%
-30%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
18-34
Consumers earning over
£100,000 a category representing
only 2.3% of consumers
surveyed, reported a fall in
overall confidence of 13 points
compared to last quarter, and a
fall in job security of 28 points.
35-54
55+
Chart 5. Consumer confidence for high earners
Net % of UK consumers with annual household earnings of over £100,000 who say their
confidence has improved
20%
10%
0%
-10%
-20%
-30%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
Consumer confidence
Chart 6. Overall confidence of low earners
Net % of UK consumers with annual household earnings of under £25,000 who say their
confidence has improved
Your job
security
-30%
-35%
-40%
-45%
-50%
-10%
-8%
-5%
-7%
-7%
-7%
-10%
-8%
-15%
-13%
-8%
-10%
-4%
-20%
-15%
-25%
-29%
-26%
-19%
-15%
-20%
-20%
-20%
-14%
-20%
-17%
0%
-5%
-10%
Your children’s
education
and welfare
1%
Your general
Your job
health and opportunities/
wellbeing
career
progression
-2%
-2%
Your level
of debt
-3%
-2%
5%
Your
household
disposable
income
-44%
-41%
People with an annual household
income of less than £25,000 a year
reported rises in confidence in
nearly every category year-on-year,
with the exception of job security,
which has remained flat.
Job security
Q2 2012
Q2 2013
Q2 2014
Q2 2015
Q2 2016
3
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Consumer spending
Consumer spending remains stable
On balance net consumer
spending on essentials remains
flat. However, the shift from
essentials to discretionary
spending continues, with net
spending on both big and small
ticket discretionary items rising.
The categories with the biggest
quarter-on-quarter rises in net
spending were alcoholic beverages,
clothing and footwear, and long
break holidays.
Consumer expenditure data up
to the first quarter of 2016 shows
growth in spending is flattening,
with a marginal fall of 0.1% in the
growth rate from the first quarter
of 2015.
Our data shows that over the last
three months consumers report
spending more in almost every
category compared to last year.
The only category where spending
has fallen year-on-year is for
long-break holidays. Quarter-onquarter, every category with the
exception of utilities has risen.
Chart 7. Essentials vs discretionary spending
Net % UK consumers spending more by category spending
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
Essentials
Small-ticket items
Big-ticket items
Chart 8. Consumer expenditure
Annual % change year on year
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
Q1
06
Q1
07
Q1
08
Q1
09
Q1
10
Q1
11
Q1
12
Q1
13
Q1
14
Q1
15
Q1
16
Chart 9. Category spending in the last three months
Net spending in the last three months
30%
20%
10%
0%
-10%
-20%
4
Q2 2012
Q2 2013
Q2 2014
Q2 2015
Q2 2016
Holidays (long break)
Restaurants and hotels
Going out
Electrical equipment
Transport
Landline/mobile phone,
Internet and TV subscriptions
Health
Major household appliances
Furniture and homeware
Utility bills (e.g. water,
electricity, fuels)
Housing (e.g. rent, mortgage)
Clothing and footwear
Alcoholic beverages
and tobacco
Grocery shopping for food
and non-alcoholic beverages
-30%
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Consumer spending
Consumer spending remains stable
Retail sales data shows sales values
have performed relatively well over
the first half of the year. In June,
retail sales values were up by 1.8%
on the previous year.
Chart 10. Retail sales
% change in volume and value year-on-year
8%
6%
4%
2%
0%
-2%
-4%
-6%
Q2
06
Q2
07
Value
Inflation is still low across most
categories, with competition
keeping prices down in grocery and
promotions doing so in clothing
and footwear. However, in June
overall inflation rose to 0.5% from
0.3% in May. Inflation forecasts
have started to predict a larger rise
in the second half of 2016 and
into 2017.
Q2
08
Q2
09
Q2
10
Q2
11
Q2
12
Q2
13
Q2
14
Q2
15
Q2
16
Volume
Chart 11. Inflation (CPI)
% change year-on-year
0.5%
0.0%
1.1%
0.1%
2.3%
1.9%
Total inflation
Miscellaneous goods & Services
Hotels, Cafes & Restaurants
Education
Recreation & Culture
-1.0%
Communication
-0.2%
-1.8%
Transport
Health
-0.5%
-0.3%
Furn,HH equip & Repair of the house
Housing, Water & Fuels
-0.7%
-0.8%
Clothing & Footwear
Alcoholic beverages, Tobacco & Narcotics
-2.9%
4.8%
10.0%
0.8%
1.1%
3.7%
2.7%
1.6%
0.1%
0.4%
0.5%
2.3%
Food & Non-alcoholic beverages -2.2%
June 2016
Compared to a year ago, the
proportion of consumers
displaying both expansionary
and defensive behaviours has
remained static. The gap between
the two has continued to narrow
quarter-on-quarter, suggesting
consumers are becoming more
measured in their spending.
June 2015
Chart 12. Expansionary and defensive spending behaviour
% UK consumers spending more or less
28%
26%
24%
22%
20%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
1 1 1 2 1 2 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16
Defensive
Expansionary
5
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Brexit
Uncertainty over the next 12 months
When asked about prospects
for the coming 12 months in
the light of the result of the EU
referendum, consumers’ response
was strongly negative in all seven
areas. Non-essential spending is the
area where consumers feel least
confident over the next 12 months.
This was closely followed by their
overall personal financial situation,
and savings and investments. UK
house prices was the area where
people feel least concerned.
Chart 13. Consumer confidence after EU Referendum
People in higher social grades
reported significantly lower levels
of confidence across all measures
than people in lower social grades.
Chart 14. Consumer confidence by social grade
Net % of UK consumers who said their confidence about the next 12 months has improved
0%
-10%
-20%
-30%
-25%
ABC1
Affordability
UK house prices
-17%
Affordability
UK house prices
-17%
Your job security
-22%
-27%
Your income before
tax e.g. wages,
overtime, bonus
-28%
-37%
Your spending on
grocery shopping for
food and non-alcoholic
beverages
-38%
-30%
Your savings/
investments
Your overall personal -40%
financial situation
-29%
-50%
Your spending on
non-essential -41%
categories e.g.
-33%
holidays, going out, etc.
-40%
-21%
-10%
-9%
0%
-30%
C2DE
Chart 15. Consumer confidence by age
Net % of UK consumers who said their confidence about the next 12 months has improved
0%
25-34
35-44
55+
-7%
-1 8 %
- 2 1%
- 1 1%
- 12 %
Affordability UK
house prices
- 37 %
-3 8%
- 39 %
- 31 %
- 3 3%
Your savings/
investments
-3 4 %
- 42 %
- 40 %
- 3 2%
- 2 6%
Your spending on
groceryshopping for
food and nonalcoholic beverages
- 34 %
- 3 6%
- 31 %
-2 3 %
-15%
45-54
Your spending on non- - 48 %
%
essential categories - 45
- 4 3%
e.g. holidays, going
-3 4 %
- 30 %
out, etc.
18-24
Your income before
tax e.g. wages,
overtime, bonus
Your overall
personal financial
situation
-50%
Your job security
-40%
- 41 %
-4 2 %
- 38 %
- 30 %
-30%
-20%
- 3 2%
-2 9 %
- 27 %
-21%
-6 %
-10%
-30%
6
Your job security
Net % of UK consumers who said their confidence about the next 12 months has improved
-20%
Younger consumers, who in the
past have shown greater levels of
optimism, are significantly more
negative about the coming 12
months than older consumers.
-14%
-33%
Your income before
tax e.g. wages,
overtime, bonus
Your spending on
non-essential
categories e.g.
holidays, going out, etc.
Your overall personal
financial situation
-35%
Your spending on
grocery shopping for
food and non-alcoholic
beverages
-35%
-37%
Your savings/
investments
-40%
-19%
The Deloitte Consumer Tracker Q2 2016 | Confidence remains flat but job worries cloud outlook
Outlook
Possible headwinds in the coming months
In the coming three months
consumers plan to spend more on
holidays and going out, groceries
and big ticket items such as
furniture and appliances. They
expect to spend less on clothing
and footwear.
Chart 16. Spending over next three months
Net % of UK consumers spending more by category
20%
10%
0%
-10%
Q2 2012
Q2 2013
Q2 2014
Q2 2015
Sentiment among the Chief Financial
Officers of the UK’s largest corporates
has fallen sharply in the wake of the EU
referendum, the Deloitte CFO survey
has shown in Q2 2016. Perceptions of
uncertainty have soared in the wake
of the vote to levels associated with
the euro crisis five years ago. The spike
in uncertainty has had an immediate
effect on business sentiment with
optimism dropping to the lowest
level since the survey started in 2007,
lower than in the wake of the failure of
Lehman Brothers in late 2008.
Chart 17. Deloitte UK CFO Survey
Consumers’ confidence in the
wider economy has seen a sharp
fall since the EU referendum.
Confidence in the general
economic situation is now 33
points lower than at the same time
last year, as uncertainty about the
UK’s prospects once it leaves the
EU affects consumer sentiment.
Chart 18. Economic confidence
Utility bills (e.g. water,
electricity, gas and
other fuels)
Transport
Grocery shopping for
food and non-alcoholic
beverages
Housing (e.g. rent,
mortgage,
maintenance)
Holidays (long break)
Furniture and
homeware
Major household
appliances
Electrical equipment
Going out (e.g. cinema,
theatre, concerts, etc.)
Alcoholic beverages
and tobacco
Restaurants and hotels
(eating out and
short break)
Clothing and footwear
-20%
Q2 2016
Net % of CFOs who are more optimistic about the financial prospects of their company
than three months ago
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
-80%
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Q3
13
Q3
14
Q3
15
Q2
16
Consumer confidence in the general economic situation over the coming 12 months
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
Q2
06
Source: GfK
Q2
07
Q2
08
Q2
09
Q2
10
Q2
11
Q2
12
Q2
13
Q2
14
Q2
15
Q2
16
7
Contacts
Nigel Wixcey
Industry Leader, Consumer & Industrial Products
020 7303 5007
nigelwixcey@deloitte.co.uk
Ian Geddes
Lead Partner, UK Retail
020 7303 6519
igeddes@deloitte.co.uk
Graham Pickett
Lead Partner, UK Travel, Hospitality and Leisure
01293 761232
gcpickett@deloitte.co.uk
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About this research
The Deloitte Consumer Tracker
is based on a consumer survey
carried out by independent
market research agency, YouGov,
on our behalf. This survey was
conducted online with a nationally
representative sample of over 3,000
UK adults aged 18+ between 24 and
27 June 2016.
A note on the methodology
Some of the figures in this research
show the results in the form of a
net balance. This means that in a
survey of 100 respondents, assume
that 30 reported they are spending
more, 50 reported no change and
20 reported they are spending
less. The net balance is calculated
by subtracting the number that
reported they spent less from the
number that reported they spent
more, i.e. 30 – 20 = 10. This means
10% of consumers reported that
they spent more rather than less.