Consumer confidence hits rock-bottom

Job worries, fuel prices and intense pressure on budgets has seen UK consumer confidence hit rock-bottom. Nationwide's Consumer Confidence Index claims confidence was hammered for the fifth consecutive month, hitting 36 points in October.

To put that in context, the long-running average is 78 points. There's little optimism for the future: just 13% of those questioned think the UK economy will pick up in the next six months.

Bad times

"Pressures on household budgets have also intensified, with underlying wage growth running at less than half the rate of inflation and the jobs market showing renewed signs of weakness," says Nationwide chief economist Robert Gardner. "Employment dropped by a substantial 197,000 in the three months to September – not far off the pace of job losses recorded during the depths of the recession."

Nearly half of consumers surveyed viewed October as a bad time to make a major purchase, compared to a quarter who viewed it as a good time. Attitudes towards household goods purchases also weakened marginally during the month. The downbeat mood extended to the housing market, where consumers expect prices to fall by 0.6% over the next six months, the building society added.

Risk averse

Not good news. Interestingly, Nationwide's survey clashes with news from the Office of National Statistics this morning. It claims UK retail sales climbed unexpectedly in October. Sales including fuel climbed 0.6% from September, the most since mid-summer it said.

Morrisons is a good example of a retailer that has seen increased sales in the last quarter, but on the back of promotions, rather than a sustained rise in consumer confidence. Excluding fuel and VAT, like-for-like sales rose 2.4% in the 13 weeks to October 30.

So, a mixed bag. November could be rather tighter, given the seasonal pressure to spend as Christmas looms. How confident are you yourself? Please tell us.



Nationwide Consumer Confidence Index