For the first time in 3 months consumer confidence showed a gain, up 2 points to –17 and 20 points higher than a year ago. January often sees sharp jumps in sentiment with the start of the New Year – especially in the spending confidence measure. This year the spending measure was flat (-16) with rises in both general economic situation measures pushing the headline CCB higher.
Overall personal finances showed a slight improvement with the forward measure of expected financial position over the next 12 months up 1 point to +4 (up 18 points on a year ago). The backward looking measure is unchanged at –14, up 4 points on a year ago.
Optimism about the economic situation drove the CCB higher from last summer but fell back sharply in December. This month people have regained some of their autumn optimism with the measure up 4 points to –2. It is some 46 points higher than January 2009. The backward looking measure of the economic situation gained 4 points to –57, and is up from –80 a year ago.
Forward-looking measures are generally strong with the unemployment measure hitting a 21- month high suggesting that job prospects may be picking up. Greater job availability is vital to improving confidence and growth prospects.
Inflation expectations edged up to the highest since October 2008, and will pose a growing issue for the Monetary Policy Committee in their deliberations, especially if the pound also comes under pressure.
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