Today’s consumer confidence release from Nationwide shows
confidence up 5 points on the month to 75 on the back of improvements in the
Present situation and Future expectations measures. The Spending measure, which
has bounced some 10 points on average in 4 out of the past 6 years in January,
fell back 1 point, although remains well above its long-term average.
As in the GfK survey at the end of January, optimism among
consumers about the economy picked up again following a plunge in December.
Better job availability may be one reason together with the expected ‘official’
end to the recession. 69% of people still believe the current state of the
economy to be bad, an improvement on 73% in December, although the impact of
stimulus measures appears very patchy.
Spending confidence - in it being perceived as the right
time for making major purchases - has been a feature over the past year. Good
deals boosted by measures designed to help spending – the cut in VAT, stamp
duty holiday and car scrappage scheme, have induced spending, notably on new
cars. Sentiment fell back in January as some of the stimulus measures ended,
although remains relatively strong. A net balance of –6% of consumers believe
it is a good time to make purchases, down from –3% in December, but up from
–18% a year ago.
The Nationwide spending confidence measure also includes
spending on brown or white household goods. This measure picked up in January –
a net balance of 45% of adults believes it is a good time to buy – up from 42%
in December - the highest proportion since February 2009.
Overall the lack of momentum in the spending measures in
both the Nationwide and GfK surveys is disappointing if such scores are
regarded as indicators of future retail sales. It appears more people are
looking to save and repay debt, and with uncertainties over the outlook for
incomes and credit availability prospects for retailers are somewhat gloomy.
John Gilbert, Chief Executive of JGFR commented: “Consumers
will remain cautious in outlook for a number of months, in a period that will
increasingly be dominated by the forthcoming general election and great focus
on the economic record of the Government and on future Opposition policies.”
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