Last month’s near record surge in confidence went into
reverse in June. Despite Nationwide reporting a strong rebound in consumer
confidence in May to mirror the GfK May results, consumer optimism found little
support as a news story with the media seemingly determined to spread economic
gloom. Unsurprisingly banking scare stories of knock-on effects from the Greece
crisis have increased financial uncertainty.
The GfK headline consumer confidence measure shed 4 points
to –25 on the month and is down 6 points on June 2010. It remains at recession
level with worries about the current state of the economy (down 5 points to
–50) and future state of personal finances (down 5 points to –8) the weakest
measures in the headline CCB Index.
Spending confidence continues to be historically weak and
suggests consumer demand on the high street will struggle to gain momentum.
Both spending measures slipped slightly in June and are below the levels of a
year ago.
Household finances that seemed to have turned a corner in May weakened in June with fewer savings and more ‘making do’ households. 43% of households were saving in June compared to 46% in May with making do households rising from 41% to 43%. Savings intentions in the next 12 months also deteriorated with a drop in the mean measure from 8 to 3.
The two brighter spots in June are a 4-month high in the
measure of unemployment expectations and the continuation of inflation
expectations running well below the 6-month average. The JGFR Misery Index
tracking unemployment and inflation intentions improved to its best level (115)
since a year ago.
Regionally, only the South avoided a fall in sentiment in
the month, unchanged at –21. Northern Ireland (-37), Scotland (-34) and Wales
(-29) are suffering most from weak consumer confidence. Both in the North and
the Midlands confidence dropped 5 points to –26 and –21 respectively.
Full analysis of the mood of the consumer can be found in the UK Consumer Confidence Monitor – details John Gilbert 0208 944 7510 or email j.gilbert@jgfr.co.uk