By Daniel Hunter

At 39.3 in March, up from 37.7 in February, the headline Markit Household Finance Index (HFI) matched that seen last November and therefore pointed to the joint-slowest rate of deterioration in financial sentiment since December 2010. Nonetheless, around four times as many households (29%) reported a drop in their finances during March as those that registered an improvement (7%).

March data indicated a wider household finance divergence between private sector and private sector workers. The equivalent index for those in the public sector dropped to 38.5 (a three-month low), while the reading for private sector workers was 43.2 (its highest since June 2010).

Households indicated that worries about finances over the year ahead eased slightly in March. Around 43% of respondents expect their finances will worsen over the next 12 months, while 26% forecast an improvement. As a result, the index measuring households’ financial outlook rose to 41.8, up from 40.6 in February.

In line with the trend for current finances, private sector employees are much less downbeat (37% expected a fall) than those in the public sector (45% anticipate a decline).

Four of the five income groups expect that their finances will worsen over the year ahead, with the highest earners (£57 751+) the exception. This cohort is the most upbeat since last August.

London was the only region to record positive expectations for household finances in March, while those living in the North East and Yorkshire & Humber are the most pessimistic.

“Households are clearly seeing no signs of a triple- dip recession. On the contrary, respondents reported the largest monthly increase in workplace activity for three years in March, recording a second successive month of growth after a slight fall in January," Chris Williamson, Chief Economist at Markit and author of the report said.

"The increase in workplace activity therefore bodes well for the economy to have grown in the first quarter.

“Being busier at work meant job insecurities fell to the lowest seen since the 2008- financial crisis, and income from employment rose for the first time since September 2010.

“As a result, households reported that their finances deteriorated at one of the slowest rates since mid- 2010. However, the improvement is only being felt in the private sector, with publics sector employees reporting an increased rate of deterioration in their finances.

“Households are expecting to see little change emanating from the Budget. Finances are expected to continue to deteriorate over the coming year, albeit at a reduced rate. Any improvements from rising take home pay are likely to be offset to at least some extent by rising prices: inflation expectations hit the highest since price pressures spiked in late-2011.”

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