Chart of the Week: Fathom’s UK ESI Loses Steam

Our UK Economic Sentiment Indicator (UK ESI), which distils information from numerous consumer and business surveys into one gauge of underlying economic activity, nudged lower in April. Marking a continuation of the recent downward trend, the vast majority of survey respondents felt less confident in April than in March. The construction sector was the exception to the rule, perhaps reflecting a rebound in sentiment following the adverse weather in the first quarter.

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Meanwhile, despite the year-long squeeze on real household incomes coming to an end in February, consumer confidence remains in the doldrums, with GfK’s Consumer Sentiment Index slipping two points to -9. That measure, combined with other consumer-focused soft and hard data indicators, has been used to form our proprietary consumer-related recession watch. Shared with our clients in a recent note, our proprietary indicator highlights the unusual weakness of the consumer environment, with the current downturn reminiscent of 2008 and indicative of soft household consumption growth.

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