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
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.