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The Nationwide Consumer Confidence Index remains at 94 for the third consecutive month Confidence in the present state of the economy sinks to a new low of 88 Record numbers of people are gloomy about job prospects House price expectations reach new high Further signs of consumer confidence stabilising
Consumer confidence remains flat as the main Nationwide Consumer Confidence Index stays at 94 for the third consecutive month. Confidence has stabilised 6 points lower than it was 12 months ago and 16 points lower than its highest level of 110 in February 2005. While overall confidence levels have stabilised, confidence in the present situation continues its downward trend and has reached a new low of 88. Confidence in the current economic and employment situation has fallen on average, half a point every month since Nationwide began measuring confidence in May 2004. All indices are compiled in partnership with TNS. Consumers are particularly gloomy about the employment situation. One in three people (33%) - the highest proportion recorded since the Index began - are pessimistic about the number of jobs that will be available in six months' time. This is significantly up from the 21% seen in May 2004. Confidence in the current employment situation is also downbeat as the number of people, who are pessimistic about current job availability rose to a high of 28% for the third time in eight months. Following two months of a more optimistic outlook, the Expectations Index fell back 1 point to 97, just 1 point below its position a year ago whilst the Spending Index in July rose 9 points and is currently 3 points higher than 12 months ago - the only index to see a year on year rise. Official sales data suggest that the World Cup boosted the sales of food and drink but we may see consumers cut back later in the year as they remain cautious on how much they are willing to spend. Stuart Bernau, Nationwide's executive director, said:
"It is almost 12 months since the Bank of England last changed base rate and over that period consumer confidence has stabilised. However, this more settled environment may not last as people are increasingly concerned about the current economic situation and the number of jobs available both now and over the coming months. "There remain signs of unrelenting pressure on consumers especially with continued energy price increases, moderate earnings growth and reports that the price of fresh food may rise. This, plus the recent run of strong economic data will give the MPC food for thought and could ignite debate about a possible rate change." House price expectations improve dramatically
House price expectations have risen significantly in July, with consumers now expecting prices to rise 4.2% over the coming six months, the highest increase they have ever predicted and significantly up from the 2.7% recorded in June. Consumers' expectations appear to have rallied in the last month, perhaps prompted by the pick up in the housing market seen over the spring.
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