Money News
The Nationwide Building Society is reporting that its Consumer Confidence Index fell in June for the first time since December 2006. The fall reversed half of the dramatic rise in confidence recorded in May.
The Present Situation Index (how consumers feel about the current economic and employment situation) and Expectations Index (how consumers feel about the economic and employment situation in six months time) also fell - the former coming in at 98 against May's 101, the latter declining for the first time in 6 months to 93.
Elsewhere, the Spending Index (reflecting the consumer's propensity to spend) was the only index to increase, rising 2 points in the month. But it remains broadly flat in comparison to the previous 6 months.
Fionnuala Earley, Nationwide's Chief Economist, said: "The fall in confidence in June reflects some weakening sentiment about the economy and jobs, both now and in the future.
"Higher interest rates are likely to be a major factor behind this as consumers recognise their impact on the wider economy as well as on their own pockets. Spending confidence ticked up very slightly in June but overall it is significantly lower than this time last year."
Looking forward, the typical consumer's outlook for the next six months is fairly subdued and much lower than at this time last year. More people now feel negative about the future economic situation, whilst the number of people who are positive about the future economic situation fell marginally in June from 15% to 13%.
As expected, recent interest rate rises have appeared to impact on consumers' expectations of future house prices. Peoples' expectations of house price growth have become more realistic, falling to 2.9% after reaching a high of 4.5% in May. Moving forward, the Nationwide anticipates some slackening in the housing market as rising interest rates affect affordability
04 July 2007 © Moneyextra.com
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