Consumer confidence given a much needed boost last month

Consumer confidence has received a summer boost, with sunny weather, football fever and the appointment of a new Prime Minister helping to lift the nation's mood. GfK's latest Consumer Confidence Index rose by six points to -17, marking its biggest increase since November 2023. Expectations for personal finances over the next 12 months improved by three points to +1, while confidence in the wider economy climbed eight points to -28.

Shoppers are also feeling more comfortable about spending, with GfK's Major Purchase Index increasing by eight points to -12, three points higher than the same time last year. According to GfK Consumer Insights Director Neil Bellamy, the combination of summer heatwaves, a sense of political change and optimism around lower fuel prices helped drive the rise in confidence.

The feel-good factor surrounding football is also thought to have played a role in boosting sentiment. However, Bellamy cautioned that confidence levels remain within the narrow range seen since the end of 2023 and are still far from positive territory. He added that any sustained improvement will depend on the government's ability to tackle ongoing cost-of-living pressures and support economic growth.

The improving mood is already being reflected in spending habits. Office for National Statistics data shows retail sales volumes rose by 1% in June, following a revised 1.2% increase in May. Online retailers benefited from promotions and strong demand for sports merchandise, clothing and outdoor products, while clothing stores recorded a 1.9% increase in sales as shoppers took advantage of discounts and the warm weather.

What this means for hiring. Rising confidence and stronger sales give retailers more reason to keep recruiting, particularly in clothing and online, where June's growth was strongest. GfK is clear that confidence is still negative, though, so expect retailers to stay careful with headcount until the improvement holds.