Consumer sentiment survey 2018

How has consumer sentiment changed over the last 10 years and what is the likely impact on consumer spending? Find out the results of our 2018 survey below.

Consumer sentiment - 10 year anniversary findings

Our consumer sentiment tracker was first commissioned in April 2008, after we had seen the first signs of an impending economic slowdown, but before the global financial crisis had taken hold. We have continued to ask the same question to a nationally representative sample of 2,000 adults every few months since then, and used this to develop a picture of consumers today, as well as how they feel about their financial prospects going forward.

  • Our latest September 2018 survey shows a slight improvement in sentiment since earlier in the year: marginally more people think they will be better off in the next 12 months than worse off
  • By contrast, at its worst in October 2008, 62% of adults thought they would be worse off, and 12% better off

  • Over half of all millennials (25-34 year olds) think their households are better off than they were 10 years ago; the only age group who think they are worse off on balance are the baby boomers (55-64 year olds)

  • Baby boomers are now consistently the most pessimistic cohort in our survey, whereas pensioners (over 65) are no longer as negative about their prospects

  • Looking forward, more under 45 year olds think they’ll be better off than worse off in the next year, and the clear majority think they’ll be better off over the next 10 years

  • Over the last 10 years, our consumer sentiment tracker has been a good indicator of future consumer spending patterns, predicting both the slowdowns in 2009 and 2011, and the relative bounce in 2015-16

So, despite the recent negative indicators, both politically and economically, this may be a sign that consumer spending is more resilient than some observers expect, potentially buoyed by low unemployment and relatively high wage growth. In the critical run-up to Christmas, a cautiously optimistic consumer will be a sigh of relief for retailers already facing other challenges such as increased online competition, business rates and Brexit-related costs.

A deep dive into our 2018 consumer sentiment results

Our latest survey, undertaken in September 2018, shows that just over a quarter of Britons think they will be better off in the next 12 months, marginally higher than the proportion who think they will be worse off. (see below)

Although not as optimistic as in late 2015 and early 2016, this shows an improvement in sentiment compared with last year and the beginning of 2018, and this might reflect the continued low levels of unemployment and the highest wage growth in almost a decade.

Younger people, in fact all age groups under 45, continue to show a positive balance of opinion, with only over 55s and socioeconomic group E (benefit dependent, including state pensioners) consistently negative.

In the critical run up to Christmas, this gives us some confidence that consumer spending will hold up, at least in the short term. Indeed, overall consumer sentiment has remained remarkably resilient in the past four years, and continues to be stronger than when we started our survey in 2008.

What we’ve learnt about the British consumer

Looking back at our surveys over the last 10 years, a number of consistent themes have emerged about the British consumer:

  • Age is the most significant indicator of consumer sentiment, with younger people the most optimistic, perhaps reflecting their entry into to the jobs market and expectations for advancement and earnings growth, as well as the fact that many still live at home or are unencumbered by mortgages or family responsibilities; meanwhile, older people have been consistently the least optimistic…

  • …although it’s interesting that the baby boomer generation of 55-65 year olds are now consistently more pessimistic than over 65s, perhaps reflecting their concerns about pensions and retirement, and the more pensioner-friendly policies of recent governments (e.g. pensions triple lock and pensions freedoms announced in 2015)

  • When we first launched our survey, higher socioeconomic groups were typically more optimistic; however, this has evened out over the years, and there is now little difference between AB, C1, C2 and D; only socioeconomic group E is consistently the most pessimistic

  • And, in earlier years, regional variations were also more pronounced; similarly, the initial North-South divide has dissipated, and, while there is variation between regions from survey to survey, they tend to iron themselves out over the course of a year

  • Statistically, one of the strongest correlations (-0.6) with our consumer sentiment tracker is unemployment: higher levels of employment typically lead to stronger sentiment, which may explain why sentiment has remained so resilient in the past few years

Not surprisingly, our tracker also correlates strongly to real household expenditure (+0.8); we believe it is a good predictor of future consumer spending patterns, with declines in consumer spending (e.g. in 2009 and 2011) following low points in sentiment, and the relative consumer spending boom in 2006 following on from sentiment turning positive for the first time in November 2015.

Looking back...

We asked consumers how they felt their household situation had changed since 2008, and how they thought their fortunes would evolve in 10 years’ time.

Looking back, more people thought they were better off compared with 10 years ago than worse off. Interestingly two cohorts most positive about their historical fortunes are pensioners, echoing the reasons we cited above, and millennials, perhaps contrary to what’s talked about in the press: indeed, over half of 25-34 year olds think they are better off than they were 10 years ago, and fewer than a quarter think they are worse off. The only age group who think they are worse off on balance are the baby boomers (55-64 year olds).

and looking forward

Looking forward 10 years, the age delineations are more straightforward: the younger the respondent, the more optimistic their outlook, with the clear majority of under 45s think that they will be better off over the next 10 years. Whether or not they prove to be correct, we will continue to report back on, as we look forward to continuing our consumer sentiment tracker for another 10 years to come.

 

Consumer sentiment tracker

PwC UK Onedeals consumer

View as aggregate

View by gender

View by age

18 - 24
25 - 34
35 - 44
45 - 54
55 - 64
65+

View by affluence

AB
C1
C2
DE

     

Methodology and rationale

We asked a nationally representative sample of 2,000 adults the question “Thinking about your disposable income (money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better off or worse off?” We then calculated the balance of opinion by subtracting the percentage of people who thought they would be worse off from those who thought they would be better off.

We have continued to ask this same question every few months since April 2008, and the results have given us insight into the pulse of the nation, and proven to be a good predictor of future consumer spending patterns.

 

Contact us

Lisa Hooker
UK Leader of Industry for Consumer Markets, PwC United Kingdom
Tel: +44 (0)7802 882562
Email

Kien Tan
Director, Retail Strategy, PwC United Kingdom
Tel: +44 (0)20 721 23910
Email

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