Money News
The latest Nationwide Building Society Consumer Confidence Index hit a new low in February - the index falling 3 points to 78; driven mainly by weakened confidence in the current economic situation. The Present Situation Index (how consumers feel about the current economic and employment situation) saw the biggest fall of the four indices used, from 83 in January to 76 - this prompted by a sharp change in sentiment about current economic conditions.
Meanwhile, the proportion of consumers thinking that current economic conditions are bad has increased from a quarter to a third. In contrast, consumers' feelings about the current job situation remained virtually unchanged on the month. While there does seem to have been a small upward trend in the proportion thinking there are fewer jobs available since the autumn, labour market sentiment is still much better than at this time last year, says the Society.
On the other hand, the Expectations Index, which reflects consumers' feelings about the economic and employment situation and their income in six months time, was the only index not to deteriorate in February. It remained static at 79. However, comparisons with this time last year, when it stood at 86, do reflect the overall weakening in sentiment seen in the other indices. This isn't surprising given the larger current uncertainties in the macro economy.
More than half of consumers surveyed (53%) believe there are some or many jobs available at present and 39% think this will also be the case in 6 months time. It is this sentiment around the future employment situation that has supported the Expectations Index (the only index not to see a fall in February).
Finally, the Spending Index (consumers' willingness to spend) fell 4 points to 64 - just 11% of consumers confident that now is a good time to make a purchase - down from 23% at the same time last year. This index has consistently been below 70 since November 2007, which could reflect the effect of the rising price of credit since the shock to the financial markets in the autumn. However, with a slower housing market and greater uncertainty about future economic conditions, on top of the continuing squeeze on household finances from rising food and fuel prices, weaker consumer spending expectations aren't surprising.
05 March 2008 © Moneyextra.com
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