Confidence stable but still at critical recession level

September’s headline GfK confidence measure* edged 1 point higher to -30, down 10 points on a year ago but at similar levels to July and August. Last month the GfK data slipped 1 point, reflected also in the recently released Nationwide Consumer Confidence Index for August, down 2 points to -46 (not seasonally adjusted).

Both measures show a current floor may have been reached – albeit at recession levels and not far off all- time lows.

The longer term 12 –month moving averages continue to edge downwards with the latest GfK measure down 1-point at -26, its lowest level since November 2009.

Some pick up in spending confidence

The Nationwide August measure showed both the Present Situation and Expectations index slipping, while the Spending Index gained 6 points to 77, almost reversing the 7 point fall in July – reflecting improved sentiment to making major purchases of household goods.

In the latest GfK survey, 3 measures improved – both household finances (up 1 point to - 10) and the general economic situation in the next 12 months (up 4 points to -27) - and the spending climate for making major purchases of household goods (up 3 points to 28), while the current general economic situation measure fell 1 point to -58 and the current financial position of households is unchanged at -24. All measures are well below a year ago.

Household finances under pressure from falling income levels

Unemployment and inflation expectations are unchanged in the GfK September data. Both have been fairly stable over the past 3 months, with the former better than a year ago and the latter slightly down.

Household finances continue to be under pressure with the JGFR Financial Wellbeing index – a measure of household finances, saving and spending confidence - at levels last seen in the depth of the recession. The desire to build rainy day savings and pay down debt following the recession is being eroded by the lack of income growth.

In the Nationwide August survey a net -6% of people expect their household income in 6 months- time to be higher, the eleventh consecutive month the proportion has been negative.

The GfK measure of the current financial position of households is at a 16-year low.

With little spending power and job losses growing it would seem that new measures to stimulate growth are inevitable.

A full analysis of the mood of consumers is in the September Consumer Confidence Monitor published on October 5^th. A wide range of regions and demographic segments are covered. We also provide consumer confidence analysis of other European countries.

To discuss / order your copy please email j.gilbert@jgfr.co.uk or ring 0208 944 7510 / 07740 027968

*GfK NOP surveyed 2007 adults, aged 16+, representative of the UK population between 2-11 September 2011 for The European Commission.