Confidence continues a slow climb

The Nationwide Consumer Confidence Index recorded a two point increase in August to 63 as all the indices that make up the overall figure rose during the month.

The Expectations Index saw the biggest increase of three points to 94, while the Present Situation Index, which has generally been falling since the end of 2007, rose by one point in August to 17; the first time this index has increased since April 2009.

Martin Gahbauer, Nationwide’s chief economist, said:

“The moderate increase in confidence this month indicates that, for the first time since April, consumers are beginning to feel more positive, not only about the future, but also about the present situation. The rise in positive sentiment across all the indices is no surprise as a number of key economic indicators continue to show that we may have reached the bottom of the current recessionary cycle.”

“It is likely that there will be a protracted recovery and we may see some volatility in the data as factors such as the rise in fuel duty affect sentiment. Although positive news about the housing market may have helped boost confidence, consumers’ views about spending remain relatively cautious, possibly because the level of heavy discounting seen earlier in the year has now subsided.”

Overall consumer confidence has been increasing since March, which may indicate that people are starting to believe that economic conditions are beginning to improve. Furthermore, the number of those believing the economy will be worse in six months time has been falling steadily since the start of the year. 21% of people now think conditions will be worse in six months, compared to 53% in January and 57% in August 2008. And the number of those believing there are currently many jobs available increased from 16% in July to 18% in August. Similarly, the percentage thinking there will be more jobs available in six months time increased to 23%, up from 20% in July.

Attitudes towards spending have also been upbeat in recent months, but with fewer opportunities to grab a bargain, consumers seem to be taking a more wary view of parting with their money. The number of those believing now is a good time to make a major purchase such as a house or car fell from 35% in July to 33% in August.

However, expectations about house price rises over the next six months fell slightly in August. Consumers now expect the value of their home to increase by 0.2% over the next six months, compared with 0.5% in July.

Meanwhile, moneysupermarket.com have released traffic figures, which appear to show that more people looking to move house. The proportion of new house searches increased by 20% since January 2009, while remortgage searches fell by a third

Hannah-Mercedes Skenfield, mortgage spokesperson at moneysupermarket.com said:

Our figures provide fresh evidence that appetite to buy a house is coming back into the market. Perhaps the public is becoming convinced that prices have stabilised. First time buyers who have saved a deposit and home owners looking to step up the housing ladder may therefore be looking to take advantage of the current low price environment with a view that prices cannot fall any further.”

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