The Nationwide UK (Ireland)/ESRI Savings Index, which measures overall sentiment towards saving, increased to 123 in May, from 114 in April.
The main driver of the increase was the Savings Environment sub-index, which asks if people believe that the current period is a good time to save and whether government policy encourages people to save. This increased to 112 in May, from 101 in April.
The share of respondents who believe now is a good time to save has increased in May and now stands at 35%, which is the highest recorded since June 2011. The data suggests that those who once thought the saving environment was unchanged are now tending towards either end of the spectrum. The proportion moving into the ‘very bad’ and ‘very good’ categories has increased by 4% and 2% respectively.
The Savings Attitude sub-index asks respondents about their saving behaviour and how they feel about the amount they save. The sub-index increased from 126 in April to 134 in May. The three-month moving average also rose from 125 in April to 130 this month.
Furthermore, the proportion of those who do not save at all continued to fall this month. The number of those who now save occasionally or regularly has increased to 68% from 65.5% in April. This represents the largest proportion of respondents in this category since March 2012.
Consumers are also asked about their preference as to how they might allocate any money over and above their everyday needs. The share of respondents who report that they would use the surplus to pay off debts, including their mortgage, decreased slightly to 40% from 42% in April. A further 11% said they would spend it while 9.5% said they would invest it. The proportion of respondents who would choose to save the money remains unchanged at 40% for the third month in a row.
Commenting on the Index, Brendan Synnott, managing director of Nationwide UK (Ireland), said: “The positive momentum in the Savings Index, as seen in the second half of 2014, has returned again this month. This month’s data also shows an increase in those that are choosing to save regularly, in fact this is the largest number we have seen in over three years.
“However, the proportion of people who said that they would spend any excess cash is still low at 10%. Although there is much discussion of an economic recovery, these month on month trends suggest that any upturn in the economy is having a very slow impact on consumers.”