Two sets of confidence data in the past week show a largely
pessimistic consumer, albeit one who believes it to be an opportune time to
In last Friday’s Nationwide
November survey the headline CCI slumped 11 points to –47, the lowest since
March 2009 in the midst of recession. Such a level suggests that the threat of
a double dip recession remains a possibility. All sub-indices fell, with the
greatest drop in the Expectations Index, down 15 points to 63, the lowest also since
March 2009. Both expected job losses and income expectations have worsened
considerably in the past six months. Spending confidence, measured in terms of
whether people believe it is a good time to make major purchases, tumbled 12
points to 80, the lowest level since November 2008. Fewer people believe it to
be a good time to buy a house or car – 22% compared to 37% a year ago.
GfK measure in December – boosted by surge in spending climate measure
This week’s December headline CCB released by GfK NOP is
unchanged at –21 on the month, and in the zone that points to weak / no growth
in GDP. Of the five component measures, only the spending climate measure gained
– up 10 points to –7 - its highest level since November 2007. This measure,
which gauges consumers’ perception of the climate for making purchases of major
household goods, is likely to reflect it being a good time to make purchases
before prices increase with the rise in VAT in the New Year.
More people are feeling worse off than a year ago (36%
compared to 34% in 2009) with only 21% of people expecting their financial
position to improve in the next 12 months (28%, a year ago). Only a small
proportion of people feel the economy has improved in the past year (11%, up
from 8% a year ago), with fewer expecting the economy to get better (28% v 38%,
a year ago).
Inflation and unemployment worries are behind the current
pessimistic mood, with consumer prices expected to rise 9.6% in the next 12
months and 73% of people expecting the number of unemployed people to rise in
the next year (unchanged on a year ago).
With more people likely to consider spending to beat VAT
increases, savings confidence fell in December. Stretched household finances
are resulting in fewer households currently saving (43%) compared to an average
of 45 % in the past 6 months.
A continuing spell of prolonged adverse weather may shift
spending patterns as many people have to switch between categories or bring
forward intended purchases. The outlook into the New Year is set for the
economy to continue at low or no growth levels with little sign of an upturn in
consumers’ pessimistic mood. This year’s 12-month GfK confidence measure of
–18, is up 7 points on 2009 and the highest since 2007. A year from now it
seems unlikely that the recovery in confidence in 2010 will be repeated.
The JGFR Consumer Confidence Monitor is produced monthly and
is based on GfK* and Nationwide** data. A high earners version is also
available. Regional and socio-demographic analysis of the mood of the consumer
can also be undertaken.
*A monthly survey undertaken among around 2,000 adults aged
16+ representative of the UK population and undertaken by telephone. IGfKNOP
undertake the survey on behalf of the European Commission. The December survey
was conducted between 3-10 December among 2,007 adults aged 16+.
** Nationwide’s CCI is based on a monthly survey
representative of the UK population among 1,000 people. The November survey was
undertaken by TNS-RI for Nationwide between 18 October to 21 November
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