Consumer confidence rises as holiday spend increases

Consumer confidence about disposable income is at its highest level since the end of 2011.

That is according to the Deloitte Consumer Tracker, which began tracking consumer sentiment in the third quarter of that year.

Deloitte said there was still some way to go before sentiment reached positive figures, but that consumer confidence in disposable income has risen for the third consecutive quarter, up from -33% in Q3 2012 to -25% in Q3 2013, and has improved from the depths of -43% in Q3 2011.

Net spending on holidays has improved by 11 points since then (-15% in Q3 2011 to -4% in Q3 2013); while net spending on short breaks and eating out rose by 12 points from -25% to -13% (Q3 2011 to Q3 2013).

Consumers are more positive about job opportunities and job security, and feeling less pressure on the cost of essentials. However Deloitte said it still saw signs that consumers were not yet ready to be frivolous with their cash.

Graham Pickett, head of travel, hospitality and leisure at Deloitte, said: "Whilst eager to book their holidays, consumers are still looking for ways to cap their spending amidst concern over the risk of default amongst tour operators. This is driving them to favour the bigger brands, as evidenced by the success of the packaged travel operators, and particularly those offering all inclusive holidays. In short, consumers continue to be attracted to deals that offer certainty and value for money."

Jon Lake, a corporate finance director in the licensed retail group at Deloitte, added: "The sustained warm weather throughout the summer resulted in a mixed performance for pub, bar and restaurant operators. Those with outdoor space reaped the benefits as consumers sought to soak up the sun, whilst those without such facilities saw a more mixed performance. In addition, year-on-year comparisons may be somewhat misleading as the Olympic effect from last summer's Games in London also distorts a true like-for-like analysis."

Pickett added: "Consumers are increasingly positive about their disposable income, but they remain cautious about the long-term outlook. They are far from being frivolous with their cash, as the level of real incomes continues to fall.

"This situation has been reflected in business where the latest Deloitte CFO Survey showed UK plc turning towards expansion and growth. Business willingness to invest in the travel, hospitality and leisure sectors is slowly emerging. However, the sentiment remains restrained with M&A activity focusing on less risky deals that have been in the pipeline for some time."