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UK Confidence Dips
UK consumer confidence has fallen back after its November recovery, as Britons take an 'increasingly pessimistic view of the economy and labour market', according to Nationwide and TNS whose monthly survey provides the index. The figures compare poorly with a very upbeat start to 2005.
The main Nationwide Consumer Confidence Index fell by 4 points to 94 in February - the 9th fall in 12 months. It is now just above its low of 92 (seen in October 2005) but 16 points down on a year ago. The Society tracks three other indices: Present Situation Index, Expectations Index and Spending Index - and notes that this is the first time since the index began in May 2004 that all four component indices are down in the same month.
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Stuart Bernau, Nationwide's Executive Director, is in downbeat mood: 'It is difficult to take any comfort from the latest figures. Bad news on jobs, retail sales, rising fuel and energy prices have all combined to undermine consumers' confidence. Peoples' confidence in the present economic and employment situation is near all time lows. Unemployment is at its highest rate for three years and with more job losses being announced, the gloom could continue into the Spring.'
A quick look at the charts for spending and expectations however, will confirm that the former is in fact healthy enough - consumers' attitude to making large purchases has been volatile over the past few months but not particularly pessimistic - while the expectations figure looks poor mostly by comparison with a very buoyant start to 2005. Last month, analysts considered that average figures for the last three months actually indicated signs of an upturn.
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Perhaps more worryingly, confidence in the country's 'present situation' fell by 6 points in February to its lowest level since the Index started measuring consumer confidence in May 2004, while views of the current employment situation are bleak: there has been a significant drop in optimism about job availability compared with a year ago (68% to 53%).
Optimism about house prices fell for the second consecutive month in February, with the continued decline suggesting that the housing market may be beginning to stabilise. Consumers now expect house prices to rise 2.4% over the coming six months, down from 2.6% in January, bringing consumers' predictions more in line with Nationwide's own forecast of a 0-3% change over the year.
The Nationwide CCI uses 100 as its baseline figure - the level of consumer confidence in May 2004. Its approach is simnilar to that used by the U.S. Conference Board whose much-quoted US Consumer Confidence Index has run since 1967.
More details are available at www.nationwide.co.uk/consumer_confidence . DRNO's own digest of worldwide consumer confidence surveys is available at www.mrweb.com/drno/conf
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