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The Deloitte Consumer Tracker Q3 2024

UK consumer confidence rose to its highest level in five years

The latest Deloitte Consumer Tracker shows that UK consumer confidence rose to -7.9 % in Q3 2024, its highest level in five years, taking the Consumer Confidence Index to a level last seen before the pandemic, in Q2 2019.

This quarter's result represents the eighth consecutive quarter of upward movement in the Index, and points to consumers feeling more positive about their personal and financial circumstances. The improvement in the Index in Q3 is against a backdrop of a strong labour market, the first cut in interest rates in more than four years in August, growth in real income for over a year, and inflation now below the Bank of England’s 2% target. These improving conditions should create a tailwind for a consumer recovery. Indeed, according to our research some signs of consumer spending bouncing back are emerging. The data shows that net spending on non-essential goods and services rose again in Q3 and is in positive territory for the first time since Q3 2021, when consumers were emerging from the pandemic. At the same time, lower inflation continues to remove the pressures on essential spending, with overall net spending on day-to-day items down for the second consecutive quarter in Q3 2024. However, despite the economy returning to normal levels of growth, UK consumer demand remains weaker than in other advanced economies, and as a result trading is likely to remain subdued in the final quarter of the year. Whether sentiment will continue to improve, with the prospect for consumer spending at Christmas, will depend on what the chancellor announces in the upcoming Budget, whether there is another Bank of England rate cut, and the continued strength of the jobs market.

Net % improvement in confidence in the last three months
Net % spending more in the last three months by category
Source: The Deloitte Consumer Tracker 

Key findings Q3 2024
 

  1. Deloitte consumer confidence index rose (+1.7 percentage points) in Q3 2024 to -7.9%. Confidence is the highest in over five years and is back to pre-covid levels
  2. The improvement was driven by a significant jump in the ‘children education and welfare’ measure (+5 percentage points) to its highest level since Q3 2016 – it follows the government increasing free childcare
  3. There was also a significant improvement in ‘job opportunities and career progression’ (+2 percentage points) to its highest level since Q2 2019
  4. Consumer sentiment on the state of the UK economy dropped this quarter by five percentage points however the measure remains higher than a year ago
  5. Spending on essentials continues to fall especially in grocery, housing and transport due to lower inflation
  6. Meanwhile spending on discretionary is up and into positive territory for the first time since Q3 2021 when consumers emerge from the pandemic – the improvement was driven by strong growth in holidays, restaurants and clothing.

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Despite new car market modest growth in Q3, sales are still below their pre-pandemic levels and the growth comes mainly from fleet sales.

The recent sales surge in Q3 offers retailers optimism for sustained consumer spending throughout the crucial holiday season.

Sustained improvement in leisure spending points to consumers continuing to prioritise leisure activities.

Signs of consumer spending on discretionary bouncing back are starting to emerge.

The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on Deloitte’s behalf. This survey was conducted online with a nationally representative sample of more than 3,000 UK adults aged 18+ between 6th and 8th September 2024.

The Deloitte consumer confidence index is an average of the net % of consumers who said their level of confidence improved in the past three months for six individual measures of confidence: job security, job opportunities/career progression, level of debt, household disposable income, general health and wellbeing and children’s education and welfare.

Some of the figures in this research show the results in the form of a net balance. This is calculated by subtracting the proportion of respondents that reported spending less or feeling more negative from the proportion that reported spending more or feeling more positive. For instance, assume that 30% of respondents reported they are spending more, 50% reported no change and 20% reported they are spending less. The net balance is calculated as 30% – 20% = 10%. This means on balance there is a net 10% spending more. A value greater than zero indicates that more consumers felt positive than negative or that more consumers spent more than less. The higher the net balance, the greater the proportion of consumers that felt positive or spent more, and vice versa.

Use the interactive charts below to interrogate the data in more detail including looking at each individual measure of confidence or spending category by age groups or by household income groups.

Net % improvement in confidence in the last three months
Source: The Deloitte Consumer Tracker 

Net % spending more in the last three months by category
Source: The Deloitte Consumer Tracker 

Net % spending more in the last three months by category
Source: The Deloitte Consumer Tracker 

Net % spending more in the last three months by category
Source: The Deloitte Consumer Tracker 

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