By Wiktor Szary
LONDON--U.K. consumer confidence fell further in November as Britons grew more anxious about their financial situation and the country's economic prospects over the coming months, a survey published in the U.K. Wednesday showed.
The long-running barometer of consumer confidence, conducted by market researchers GfK U.K. Ltd. for the European Union's executive, fell by five points in November, after a two-point decline the previous month, and stood at minus 8. Economists polled by The Wall Street Journal expected an unchanged reading.
The November decline brought the index close to a level seen in the immediate aftermath of the June 23 referendum vote. The index posted the steepest monthly drop in a generation after Briton's decision to leave the EU, but sentiment subsequently recovered, reaching a pre-referendum level in September.
But British consumers' moods soured again as they grew more pessimistic about the country's general economic situation and became increasingly despondent about their personal financial circumstances, the GfK data showed. The latest figure is based on a survey of 2,039 people, conducted between Nov. 1 and Nov. 15.
Whether British consumers carry on shopping will be critical to how well the economy performs in the months and years ahead as the U.K. charts its departure from the European bloc. Prime Minister Theresa May has signaled that she intends to launch the divorce proceedings, which are expected to last at least two years, in early 2017.
Economists warn that accelerating inflation combined with limited wage growth is likely to curb Britons' willingness to part with their cash in the months ahead, hurting the U.K.'s growth prospects. Consumer prices grew at the fastest pace in nearly two years in September, slowing only slightly in October. After the pound's steep plunge after the referendum, inflation is likely to speed up further, economists and central bank officials have predicted.
Official data showed that so far, this has not dented Britons' enthusiasm for shopping. Sales grew at the fastest annual pace in nearly 15 years in October as British shoppers snapped up hats and coats and Halloween treats, helping the world's fifth-largest economy to weather the post-Brexit-vote storm. The U.K.'s economic output grew by a higher-than-expected annualized 2.0% in the three months after the referendum.
A survey published last week by the U.K.'s leading business lobby group, the Confederation of British Industry, showed retailers enjoyed their best month for sales in a more than a year in November, as consumers stocked up on winter clothes.This, however, won't be confirmed until official data are released in mid-December.
While Wednesday's GfK data suggest consumer confidence weakened, a wider survey by the European Commission recorded a big improvement in manufacturing sentiment, reflecting higher expectations for future production. Its manufacturing confidence measure rose to 5.7 from -0.4, reaching its highest level since Feb. 2015, despite a reported weakening in new orders.
With the measure of retail sentiment recording an even larger surge to 16.2 from 1.8 in October to reach its highest level in more than a year, the Economic Sentiment Indicator--which aggregates consumer and business confidence--rose to 107.3 from 105.8, its highest level this calendar year.
--Paul Hannon contributed to this article.
Write to Wiktor Szary at email@example.com
(END) Dow Jones Newswires
November 29, 2016 19:15 ET (00:15 GMT)
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