Household finances at their least worst for 53 months

A good news/bad news moment.

How's this for a good news/bad news data release: the Markit Household Finance index is at its highest level since February 2010 (that's good); its highest level since 2010 is just 40.8, where anything below 50 is worsening (that's bad).

The HFI is the consumer-centric brother to Markit's more famous PMIs, which measure business activity across the construction, manufacturing and services sectors. The HFI questionnaire asks individuals about the state of their household finances, their expectations for their finances, and their expectations for the country's finances. It's then all compiled into a index where 50 is equal to "no change". With that in mind, it's easy to see that the state of Britain's households are both equal to the highest they've been since February 2009, when the index began; and far, far below par:

Markit's Chief Economist adds:

 

Improving household finance trends are an early indication that the UK economy has continued to strengthen in June. Households’ perceptions of financial stability are now at a level unsurpassed over the past four-and-a-half years. Better labour market conditions helped reinforce the upturn in households’ financial expectations during June, as rising levels of workplace activity translated into diminishing job insecurities. However, income from employment dipped at the fastest pace for five months, highlighting that pay restraint remains the order of the day. With households receiving little in the way of wage rises over recent months, a fall in inflation perceptions to their lowest since mid-2010 was an important factor in alleviating some of the strain on finances during June.

Some other tidbits from the release:

  • Around 26% of survey respondents signalled that their finances worsened in June, while almost 8% noted an improvement.
  • Of the main housing categories, people that own their property outright were the least downbeat (43.4). This was followed by mortgage holders (41.9).
  • Reduced job insecurities and higher workplace activity nonetheless failed to translate into rising income from employment in June. At 48.4, down from 51.1 in May, the index reached its lowest level for five months.

The index has the quirk of measuring perceptions, rather than concrete values. So there's some – for instance, employment income – where the data gives some interesting insights. In nominal terms, wages have been rising, but in real terms they've been shrinking for years. What the index suggests is that workers don't take either of those data points as the canonical description of their income, instead using some mixture of the two.

It also highlights the problems with an index like this, though. Regardless of inflation, it is probably untrue to say your income is falling if in nominal terms it's not. Self-reported datasets, in the end, say more about how people feel than how they actually are. And people feel less bad now than they have been for quite some time – but they still aren't exactly happy.

Doing the maths… Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The problem with Theresa May's Brexit message is that isn't true

By refusing to level with the public, May is storing up Blair levels of disillusionment for the future.

You can get an idea of how low-wattage the election is so far from the amount of attention being paid to Boris Johnson, who has returned to the scene, not to talk about the ongoing tensions between the United States and North Korea, but to call Jeremy Corbyn a "mutton-headed mugwump" in a column for the Sun

It's the classic Johnson gambit - a colourful way of appearing to be off-message while reinforcing the central message of the Conservative campaign: that this is an election about Brexit, and that the bigger the majority, the greater the chances that Britain will get a good Brexit deal.

It has the added benefit of punching Labour's biggest bruise: the thumping lead that Theresa May enjoys over Jeremy Corbyn as Britain's preferred Prime Minister. IpsosMori, Britain's oldest pollster, have a poll that sums up the scale of May's advantage: she's currently the most popular PM we've had since IpsosMori started polling: more popular than even than Margaret Thatcher or Tony Blair at the peak of their powers. "Poll: May most popular leader in FORTY years" is the Metro's splash. And all of the evidence suggests that it is working, with the Tory lead extending since the election was called.

There's just one small problem, really: May's message isn't true. EU leaders feel the same way about other people's elections as most people do about other people's pets or children: they'll try to accommodate them, sure. But ultimately, they take a distant back seat to their own. There is not a Brexit dividend to be unlocked simply through getting a bigger Conservative majority. Whether May's majority is one, ten or 100, she will face the same trade-offs and the same partners with the same incentives.

There is a bit of excitement this morning about the fact that the Times/YouGov tracker shows that more people (45%) say that Brexit is not working than say it is working (42%). The truth is that the margin of error in all polls is plus or minus three, so that shouldn't be seen as anything more than noise. Every other poll and focus group shows that the bulk of people still have sky-high expectations of Britain's Brexit deal.

Brexit may be a success, but it will involve concessions to our partners in the EU and won't be the cure-all that many people who voted to Leave believe that it will. By refusing to level with the public, May is storing up late-period Blair levels of disillusionment for the future. Not that it matters as far as she is concerned; if the polls are to be believed and I see no reason to disbelieve them, she's headed for a win that means the next time the Opposition could even hope to competitive will be 2027 - by which time she'll be 71 and likely contemplating retirement and the speakers' circuit.

But if you look at everything that's happened to Labour since their promise to have "ended boom and bust", her successors at the top of the Tory party will live to regret her lack of candour.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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