Following the biggest monthly fall in confidence since 1994 in January, the February GfK headline measure (CCB) for the European Commission gained 1 point to –28, still at recession levels, and down double the level of a year ago.
February’s measure was boosted by both current and future personal finance measures showing improvements. The backward measure comparing the position now with 12 months ago picked up 2 points to –16, while the forward looking measure comparing the position 12 months hence with now, also rose 2 points to –10, some 16 points lower than a year ago.
While both general economic measures continued to deteriorate in February, no doubt affected by growing political tension in North Africa and consequent oil price spikes, more people appear to be considering a spot of retail therapy to escape from the uncertainties reported by the news channels.
Both spending measures showed marked improvements in February – with more people believing the climate right for making major purchases of household goods. This measure – up 4 points to –25 also helped to push the headline CCB index higher.
Consumer spending intentions on household goods jumped 8 points on the month to -28, the best measure since last September. Around 1 in 5 consumers expect to spend more on major purchases of household goods compared to 15% in September and 14% a year ago. Such a pick up in spending confidence appears at the expense of saving with both saving measures falling back sharply in February.
Despite the better headline figures, consumers continue to be very uncertain, with 81% of adults expecting more jobs to be lost in the next 12 months, the proportion rising from 77% in January and 63% a year ago. Far fewer people intend to save. A half of people is likely to save in the next 12 months compared to 54% a year ago. Currently 42% of households are saving, down 1 point on a year ago.
Inflation continues to be a major concern and is the reason for the Bank of England’s Monetary Policy Committee coming under pressure to raise interest rates. In the GfK survey the public believe the cost of living has risen 11.6% in the past 12 months and are expecting a 9.7% rise in the next 12 months, far outstripping the official measures and presenting a policy conundrum with no safe passage.
A full analysis of the survey results can be found in the JGFR Consumer Confidence Monthly Monitor published in early March. For details ring 0208 944 7510 / 07740 027968.