The autumn boost in consumer confidence is quickly fading as
people become aware of the cold financial climate coming later in 2010. This month’s
Nationwide headline consumer confidence index (CCI) is 8 points lower (70) than
in November (78) and is the second successive month confidence has fallen – as
in the GfK survey in late December (down 2 points to –19). In both surveys
optimism about economic prospects – a feature of the autumn surge in confidence
– fell back sharply.
Both surveys – but especially the Nationwide survey – show a
weaker jobs outlook which had been strengthening in recent months. The autumn
improvement is reflected in official figures showing fewer job losses than many
economists and commentators were expecting.
In the Nationwide survey the net balance of people thinking
there are currently many/some jobs available fell from –45% to –51% on the
month while the net balance of people thinking there will be many/some jobs
available in 6 months time fell from --25% to -28%.
In the GfK survey, that asks people about the expected
number of unemployed people in the next 12 months, a net balance of 61% expect
unemployment to rise compared to 58% in November, although well down on 81% a
year ago.
Consumers more pessimistic employment outlook contrasts with
recent business surveys that suggest an improvement in job openings in the
coming months. Many companies have negotiated fewer hours and lower pay as an
alternative to job losses and will be hoping to see through the recession. Much
will depend on the strength of economic recovery as to whether firms will be
able to continue to hoard jobs and consider creating new jobs. This months
preliminary Q4 GDP release will be a key data release to gauge the likely
strength of recovery.
Weakening confidence suggests growing uncertainty feeding
into a more cautious approach to spending – and a greater preference for
saving. The surge in post-Christmas store sales may reflect pent up ‘retail
therapy’ on perceived bargains before a year of austerity sets in. The current
weather will help to foster such behaviour with more income spent on heating
bills.
To get a more informed view of the current mood of the UK
consumer subscribe to the monthly UK Consumer Confidence Monitor. Details /
enquiries ring 0208 944 7510 or email info@jgfr.co.uk