Confidence edges lower in Nationwide June CCI

As in the June GfK NOP consumer confidence headline measure (down 4 points to –25), the June Nationwide CCI fell – down by 7 points compared to the record 15-point jump in May.

Warm sunshine, the feel-good glow from the Royal Wedding and an extra bank holiday all added to a more optimistic cheerfulness that boosted confidence in May. This month indifferent weather, frustration over the Olympic ticket sales process and a very gloomy news media have reduced the more positive consumer outlook.

Both GfK and Nationwide measures remain at recession levels – the latter is down 11 points on a year ago and is 14 points higher than the February all-time low. Compared to Q1 confidence is up x points to xx in Q2.

A reason for the fall in the Nationwide CCI to a post-recession low is a greater emphasis on jobs with the public extremely worried in the winter about the impact of public sector job cuts. Such sentiment has improved – as reflected in improving official employment data.

In the Nationwide Present Situation Index – unchanged on the month at 25 and down 1 point on a year ago, a net balance of –41% of adults (-40%, May) believes there are many/ some jobs available. The 6-month average is –43%.

In the Expectations Index – down 10 points at 73, and giving back a half of the 20-point surge in May, a net balance of –33% of adults believe there will be many/some jobs available in the next 6 months, down from –31% in March, but higher than the 6-mopnth average of –38%.

One more cheerful note is the Spending Index – while down 5 points on the strong May measure at 78, it is above the 6-month average of 71. Weak wage growth is limiting spending power together with a reduction in the desire to borrow and of credit availability.

Such weaker demand may be resulting in a lowering of high street prices that may boost spending power, although the prospect of rising food, fuel and energy prices may continue to constrain spending. Retail sales volumes in June surprised analysts by coming in a higher than expected 0.7% month-on-month. All may not be as gloomy as the media suggests.

Judging by the demand for tickets for events the nature of consumer spending may be changing as experiences play a bigger part in consumers’ lives.

For details of the JGFR consumer confidence series and reports please contact John Gilbert on 0208 944 7510 / 07740 027968 or email j.gilbert@jgfr.co.uk