Money News
The latest Nationwide Consumer Confidence Index (NCCI) shows UK consumer confidence ticking down 1 point in May to 69. This is the second consecutive new low and brings overall confidence to a level 30% lower than this time last year.
In a downbeat survey only the Expectations Index, which measures views about the economy, labour market and incomes in six months' time, held up during the month. But even this index has fallen almost 25% over the past year.
Fionnuala Earley, Nationwide's chief economist, said: "Consumer sentiment remained gloomy in May as consumers revised their views about the current economic situation. Darker economic news throughout the month as fuel prices reached new highs, food prices remained elevated and uncertainty about an early cut in interest rates heightened, are likely to be major factors behind this."
Earley added that confidence in spending also took a big knock, but continued faith in the jobs market suggests this is being driven by the squeeze on people's incomes from higher prices and weakness in the housing market, rather than fears over job security.
The change in consumers' confidence in the current economic situation was the most striking. More than half (52%) of those surveyed thought the current economic situation was bad compared to only 39% who felt this way the previous month and 17% a year ago.
However, pessimism about the broader economy isn't reflected in people's views about the employment situation, either now or in six months' time. Indeed, more than half (51%) think that there are many jobs available now - up from 47% in April. While this is fewer than at this time last year (60%), the number of people who think there are few jobs available has hovered around the 50% mark since January.
Likewise, people's views about the future employment situation remains fairly resilient with only one in three (31%) thinking there will be few jobs available in 6 months time. While this figure is 7 points up on a year ago, it has been virtually unchanged since January.
Meanwhile, the spending index dropped five points to 60 in the month, bringing it to a level almost 30% lower than this time last year. Almost two thirds (65%) think now is a bad time to make major purchases such as a house or a car - a new low for the index. This isn't surprising however, given that consumers' expectations about house price growth also fell sharply in the month. Consumers now expect house prices to fall by 3.5% over the next 6 months.
04 June 2008 © Moneyextra.com
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