Savings Index Continues to Trend Upwards Despite Reversal in August

September 10, 2014

News
Macroeconomics

ESRI/Nationwide UK (Ireland) Savings Index declined during August however optimism for future saving remains strong among consumers

The Nationwide UK (Ireland) / ESRI Savings Index, which measures overall sentiment towards saving, decreased to 97 in August, down five points versus the previous month.

The overall decrease is primarily driven by a 15 point decline in the Savings Attitude Index, one of two sub-indices that make-up the Savings Index. This index, which asks people about their saving behaviour and how they feel about the amount they save, decreased to 112 from 127 last month. However, it is still 11 points higher than a year ago.

In August, the proportion of people saving regularly decreased to 36% from 41% in July. However, this is an increase from 30% this time last year. There is a pattern of decline in regular saving compared to last month but an increase versus last year. This trend is apparent amongst those aged over 50 and under 50.

Optimism for saving in the future remains strong as four in five (80%) people say they expect to be able to maintain their current level of saving in six months’ time, while a further one in ten (12%) expect to be able to save more in six months’ time.

Meanwhile, the Savings Environment sub-index, which gauges opinion on economic conditions and the impact of government policy on saving, increased to 82 from 78 last month, but it is still 13 points lower than a year ago.

The proportion of people who believe that now is a good time to save increased to 30% in August, the highest level reported since May. The proportion of people who say that government policy encourages saving fell to 6%, which is the lowest figure recorded since January. When asked about their preferred use for any spare cash available after paying for their everyday needs, 44% of people said they would use the surplus to pay off debts including their mortgage – an increase of 4 percentage points from July and the same as a year ago; 12% said they would spend it, down slightly from 14% last month while 7% would invest it, down from 8% last month. Preference to save remains constant compared to July at 38%.