UK consumer confidence is stable but depressed
In the UK, consumer views of the current economic situation are particularly negative, with only 38% feeling positive about the economy - the lowest proportion ever recorded by the Nationwide Consumer Confidence Index.
Growing uncertainty about the future of the economy, employment and household income was reflected by the increasing number of "don't know" responses to the latest consumer confidence survey. Spending confidence weakened as the number of people thinking "now is a good time to buy household goods" fell to its lowest ever level.
The Nationwide Consumer Confidence Index (compiled in partnership with TNS) uses 100 as its May 2004 baseline. The index itself remained at 94 - the same as the previous month - but confidence in the current state of the economy continued a downward trend, falling to a new low of 89. However, consumers seemed slightly more optimistic about the future, as confidence has stabilised despite being at a very low level.
Not all bad news But despite low confidence in the economy itself, there has been a modest rise in the number of people who are positive about the current employment situation, perhaps reflecting the fact that there has been less news of job losses in recent weeks.
Consumers also seemed much more positive about the future. The Expectations Index (which measures consumers' views of the economy, the employment situation and household income in six months time) increased by 2 points to 98 - its second increase since January 2006. This index is the only measure that has remained reasonably stable in 2006, possibly reflecting recent economic growth.
Depressed shopping trend to end? The Spending Index fell for the second month running, reaching 95 (some 18 points below the last high in January 2006). Consumer's falling confidence is reflected by retailers, too. In recent weeks many have reported difficult trading conditions as consumers are burdened with higher living costs (including higher utility and council tax bills), and have consequently shown more caution in the shops.
However, official data suggests that there has been a modest increase in retail shopping over the past few months, perhaps encouraged by retailers' incentives as 'out of season' sales become more common.