Member Article

April sees dip in consumer confidence

Consumer confidence dipped in April as the population become more worried about the jobs market and avoid making large purchases.

The findings of the Nationwide survey indicates that confidence fell by 9% in April, erasing gains made during March. The main confidence index is more than 30 points below its long run average, although all indices saw a deterioration.

Robert Gardner, Nationwide’s Chief Economist, said: “It is not surprising that confidence remains fragile, with the economy shrinking over the past six months and labour market conditions still weak.

“The main bright spot for households over the past six months has been the sharp decline in inflation from 5.2% last September to 3.5% in March, which has helped to provide some support to purchasing power.”

Sharp falls in inflation witnessed earlier in the year are unlikely to be repeated in the short term, with inflation falling slowly back towards the 2% target. This will mean that easing price pressures are set to be less visible in the months ahead.

There are now concerns that the return to recession will depress sentiment in the near-term, although the Queen’s Jubilee in June and the Olympics in July are likely to lift consumer spirits over the summer.

Gardner continued: “Whether or not these short?term events translate into a sustained upturn in confidence will depend on the performance of the wider economy and whether any recovery quickly filters through into improved labour market conditions.”

Volatility has been driven by people’s expectations for the future, which is reflective of the unusually uncertain environment facing consumers at present.

He added: “Given the continuing economic uncertainty, it is no surprise that consumers on the whole remain cautious about making major purchases, with 45% of respondents viewing it as a bad time to make a major purchase.

“Sentiment towards purchases of household goods remains a little more resilient, with 28% of respondents reporting it to be a good time to buy such goods verses 18% rating it a bad time to make these purchases.”

British entrepreneur and MD of Aspect.co.uk, Will Davies, said: “The reality is no change of any note for your average consumer. Confidence is weak and people haven’t seen any noticeable improvement in the outlook - April’s no different to march which is no different to any other month in the last 12 or more.

“The only thing that keeps people going is low interest rates meaning mortgage payments aren’t what they were so disposable income is actually pretty good.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .