Following a fall to recession levels of confidence in November, the December Nationwide CCI* gained 6 points to 53, down from 70 a year ago but still a long way off its long-term average. The 3-month measure (53) is the weakest since May 2009 and marks the ninth successive month that confidence is either falling or unchanged.
As in the GfK measure at the end of last month, the spending climate measure on household goods surged pushing the Spending Index up 8 points to 88, almost reversing the 10-point slump in November. Knowledge of the VAT rise in January is likely to have been a contributing factor. Interestingly, the spending climate measure on major purchases such as a car or house showed a much smaller gain.
Both the Present Situation Index (up 1 point to 24) and the Expectations Index (up 10 points to 73) also improved but both remain far below their long-term averages. People are far less optimistic than a year ago when the Expectations index registered 104. People are now more worried about the number of jobs being available and their household income than a year ago.
Next month’s survey will provide a clearer picture of the consumers mood following the VAT rise. With continuing worries over inflation and jobs it seems more likely that confidence may well fall back.
For an in-depth analysis of consumer confidence each month JGFR produces the monthly UK Consumer Confidence Monitor and UK High Earners Consumer confidence Monitor. Details from firstname.lastname@example.org or ring 0208 944 7510 / 07740 027968