Consumer Confidence Increases
• Consumer confidence rose by one point to 60 in July.
• The Expectations Index increased by one point to 89.
• The Spending Index fell by 11 to 94.
• The Present Situation Index fell from 17 in June to 16 in July.
Expectations For House Prices Rise
• For the first time in over a year, consumers expect that their house price will rise in the next six months.
• Consumers are forecasting a rise of 0.5% in the value of their homes and this is the highest recorded expectation since December 2007.
Drop In Spending And Employment Confidence
• July saw a decline in confidence in the UK’s employment situation, both in the current situation and also for the future.
• In comparison to this time last year, confidence in spending is strong.
However the percentage of people believing now is a good time to buy a major item has decreased from 40% to 35% from June to July.
“Confidence broadly stable in July”
Expectations broadly stable, but spending confidence falls
Consumer confidence remains stable
Nationwide Consumer Confidence Index recorded a slight increase of one point in July.
Overall, sentiment remained stable.
While the Present Situation Index fell one point, this was countered by the Future Expectations Index which increased by one point.
The most significant changes in consumer confidence this month are that confidence in spending has fallen and that for the first time for over a year, consumers expect the value of their homes to rise over the next six months.
Martin Gahbauer, Nationwide’s chief economist, said:
“Consumer confidence remained broadly stable in July, with limited overall change in sentiment from the
previous month. The significance of this stability is that consumers appear to be remaining cautious, but not
panicked by the economic climate. This lack of volatility is crucial for the economy to recover and there are
clear signs that consumers think some degree of recovery has either begun or is expected in the coming six
months. Consumers might have been reassured by reports that the housing market may be starting to recover
and manufacturing output is no longer falling as rapidly as it was a few months ago. Only 21% of people
believe the economy will be worse than today in six months time. This is a dramatic improvement from the
start of 2009 when this figure was 53%.”
Reduction in belief that now is a good time for spending…
The largely static picture of this month’s Consumer Confidence Index, belies a couple of key changes. In
particular, confidence in making a large purchase fell in July.
The percentage of people believing now is a good time to buy a major item, such as a house or car, has decreased from 40% in June to 35% in July.
However, in comparison with this time last year, confidence in spending is strong, when only 17% of people
felt it was a good time to make a major purchase.
… but expectations about house prices are at the highest level for 19 months…
An explanation for the recent fall in spending confidence could be that consumers feel that the best of the
bargains have already been had.
For the first time in over a year, consumers expect that the price of their house will rise in the next six months.
Consumers are forecasting a rise of 0.5% in the value of their homes and this is the highest expectation since December 2007.
There have been signs that house prices may be stabilising or even increasing, and this has combined with announcements by the car manufacturing sector that the price of new cars will increase.
These factors may have slightly dampened the belief that now is a good time to make a large purchase, as prices would appear to be rising again.
In addition, retail sales figures show that June was a strong month, which could indicate that during July consumers were careful to limit their spending.
…yet there is uncertainty about the employment situation
During July, there was a significant decline in confidence in the UK’s employment situation.
74% of people think there are few jobs available currently and 60% of people believe there will be few jobs available in six
Both of these figures have increased 6% compared with June.
This rise in pessimism may be associated with recent large scale redundancies as well as news that a large number of people have been affected by redundancy or know someone who has been made redundant.
www.nationwide.co.uk/consumer_confidence July 2009
Nationwide’s Consumer Confidence Index is based on a monthly survey representative of the UK population.
For July, the TNS research for Nationwide took place from 22 June 2009 to19 July 2009 with 1,000 people.
NFO, now part of TNS, has worked with the US Conference Board since the inception of its consumer confidence index in 1967.