The high level of optimism that pushed consumer confidence
indices higher in the autumn and early part of 2010, fell back sharply in May.
The latest Nationwide survey, with an extra week of survey data than the May
GfK NOP survey which fell 2 points to -18, is down 8 points to 69, its lowest
score since last August.
Much greater pessimism about the economy is the main factor
in the slump in headline confidence. The Expectations Index fell by 12 points
to 98,also its lowest since last August. It follows the 9-point fall in the GfK
economic optimism measure.
Such a slump in optimism reflects the greater worries about
the impact of the new coalition government’s austerity approach with tax rises
and spending cuts in prospect. It suggests that few people are happy with the
election result given the honeymoon period a change in government normally
brings. In May 1997 following New Labour’s victory, confidence rose 7 points;
in April 1992 when John Major won a Tory victory to validate his unelected
party leadership confidence rose 6 points
Despite the gloomy headline measure, the job availability measures in the Nationwide survey were little changed on the month and spending confidence remains above its long term average – reflected in the latest retail sales figures. Early summer sales may be expected in the face of falling confidence and the Emergency Budget measures.
Evidence from both confidence surveys points to a weakening
in the coming months with the possibility of the economy slipping back into
recession as the impact of budget measures on jobs – both in the public and
private sectors –sees rising unemployment and a period of growing unrest
between government and unions.
Early World Cup indications suggest that not even the nation’s
spirits will be lifted with sporting success.
Next month’s Financial Activity Barometer will gauge how
confidence is impacting the demand for savings, investment and borrowing
products and on consumers attitudes towards financial services providers – with
the City and financial institutions another target for reform.
To ensure you are close to the mood of the consumer contact
JGFR for a free copy of the monthly Consumer Confidence Monitor – now in three
versions – a High Earners version, and Earlybird Version (both in the first
week of the month) and the monthly CCM in mid –month.
If you have other research needs surrounding financial and
business research please get in touch- we have a growing database of regular
survey information – now including the public’s attitudes towards the Olympics.
Please contact John Gilbert at firstname.lastname@example.org or ring +44 (0)208
944 7510 or 07740 027968