Money News
Consumer fears over the security of their jobs have hit a six-month high, despite recent official data demonstrating the health of the UK labour market, according to the latest Consumer Barometer from Lloyds TSB Corporate Markets.
The December survey found that consumers felt increasingly negative about the safety of their jobs. This was illustrated by a sharp drop in the balance of consumers feeling more rather than less secure, to -4% from -1% in November; the lowest reading for six months. The balance is the difference between the number of consumers expecting an increase and the number of consumers expecting a decrease.
On top of job fears the survey found that 74% of consumers felt prices were higher now than they were 12 months ago, causing the balance to rise 1% to 71% in December; the highest result since the survey began in November 2004. And consumers are braced for further increases with 81% predicting that prices will rise this year.
Despite the fall in confidence over jobs and prices, consumers are increasingly optimistic about the prospect for interest rates this year. Even after December's 0.25% reduction in base rate, the balance of consumers expecting rates to be higher rather than lower next year dropped to just 25% in December, from 43% in November and 75% only six months ago in June.
Trevor Williams, chief economist, Lloyds TSB Corporate Markets, said: "The slump in confidence over job security, coupled with the pressure of rising prices does not bode well for the New Year. This combination could dampen consumer spending and have a knock-on negative impact on the housing market. However, the fact that official labour market data remains strong offers some hope that job fears may be short-lived."
Williams adds that although the survey suggests that December's interest rate cut has so far had little impact on sentiment, a further two cuts early in 2008, which LloydsTSB expects, may offer a welcome boost to confidence.
02 January 2008 © Moneyextra.com
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