Daily Research News Online no. 4929 - No Consensus on UK Consumer Confidence

No Consensus on UK Consumer Confidence

December 8 2005

The UK's two main consumer confidence indexes present conflicting pictures for November. The TNS/Nationwide index, released yesterday, shows a strong rise of 9 points after three consecutive monthly falls. Meanwhile, Gfk/NOP's index, released last week, showed no movement, and remained at the lowest level since March 2003.

TNS/Nationwide Consumer Confidence Index
The nine-point rise to 101 is the largest monthly increase since the Index began in May 2004. The rise follows three consecutive months of falls, and sees the Index close to its long-term average level of 102.

The Consumer Spending index (a measure of consumers' views of whether it is a good time for major purchases) also increased by 9 points to 121. This suggests that retail sales will rebound in the run up to Christmas.

The Present Situation index (which measures how confident people are about the current state of the economy and the number of jobs available) rose by 8 points to 101 - again following three consecutive monthly falls.

The Expectations index (a measure of what people think will happen to the economy, the number of jobs available, and their own household income in six months' time) rose by 10 points to 101.

Consumers seem more optimistic about the housing market. Significantly fewer respondents expect house prices to fall: 9% compared with 19% at the start of the year. The Consumers' House Price Forecast (which looks at the next six months) has risen to 3.1% from 2.9% in October - up from 1.2% in January.

Stuart Bernau, Nationwide's Executive Director, said: 'It appears that recent negative sentiment, caused by recent higher petrol prices, fears over house prices and other factors, has dissipated. In addition to feeling more positive about the present, there has been an upsurge in confidence about the future indicating that consumers feel that better times lie ahead for jobs, the economy and their incomes.'

Based on 1,000 nationally representative interviews each month, the he survey methodology is based on that used by the US Conference Board's consumer confidence survey. The baseline figure of 100 was the level of consumer confidence in May 2004.

More details are online at www.nationwide.co.uk/consumer_confidence

GfK NOP Consumer Confidence Barometer
The main index remained at -8 in November, the lowest level since March 2003 (-10) and four points lower than the same month last year. While the outlook is generally more gloomy than the TNS/Nationwide index, there is some optimism about personal finances, and consumers are proving more willing to make major purchases.

Perceptions of the development of personal finances over the last year have remained at -4, while perceptions of personal finances over the next year increased one point from to +8.

Views of the general economic situation in the country over the last year fell by three points to -29, six points lower than November 2004. Perceptions of the general economic situation over the next twelve months remains at -19, seven points lower than November 2004.

The major purchases climate measure has increased by three points to +5, the same level as a year ago.

The CCB survey is carried out by telephone among a representative sample of 2,000 members of the public aged 16+ each month. It asks 12 questions on a monthly basis and an additional three questions every quarter.

More details are online at www.gfknop.co.uk

Consumer confidence measures in the US for the same period are more resolutely optimistic. Four different indexes - from TNS (for the Conference Board), Ipsos (for the Royal Bank of Canada), BIGResearch, and the University of Michigan - all reported similar patterns of recovery in November (www.mrweb.com/drno/news4890.htm )..