October’s Nationwide Consumer Confidence Index (CCI) reflects
the slight pick up in the GfK CCB earlier in the month (up 1 point). The CCI
rose 2 points to 58, down 23 points compared to October 2009, highlighting the
uncertain economic recovery.
All three sub-indices rose for the first time since last
April. Of most significance is the improvement in the Present Situations Index,
up to its highest level in two years despite growing concerns about the impact
of the Comprehensive Spending Review (CSR). Should such sentiment prevail in
the next two months then a slide back into recession is unlikely.
Both the Expectations Index – up 2 points to 78 – and the
Spending Index – up 4 points to 92 rose after sharp falls last month.
While more people currently believe and/or expect there to many/some jobs available in the coming months –the latter measure at its highest since last May - , the most gloomy indicator is of expected household income, falling back to close to its survey low of last July. This suggests weak Christmas and New Year sales volumes.
There is little indication of any rush to beat the VAT
increase in January. Household goods spending confidence is little changed on
the month while spending on major purchases such as a house or car, although
higher in October following a steep decline in September is up, but much weaker
than earlier in the year.
Although a brighter current situation, the outlook for the
financial wellbeing of consumers remains very uncertain as the impact of the
spending cuts announced in the CSR are yet to be reflected in sentiment data.
With little or no improvement in household income, spending is set to remain
subdued, with growth prospects revolving mainly around business investment –
especially in jobs.
A full resume of the mood of the UK consumer is contained in
the UK Consumer Confidence Monitor – the monthly guide to confidence inflation,
jobs, spending, saving and financial well-being across a range of socio-economic
and regional segments. Ring 0208 944 7510 / 07740 027968 or email