Consumer confidence holds steady

The latest figures from the Nationwide reveal that its Consumer Confidence Index – a measure of consumer feelings about the economy – remained unchanged in October, staying level at 72 points.

The Expectations Index fell by two points to 106, but confidence in the present situation continued to return and recorded a three point rise over the month. At 22 points, the Present Situation Index is now five points above its low of 17 points recorded in July 2009 following three consecutive months of rises.

Consumers’ feelings about spending continue to be resilient and remained at 103 points for the month of October. The Spending Index is now 49 points higher than its all-time low seen in September 2008 (54).

In line with recent reports citing UK house price rises, consumers now expect the value of their home to increase by 1.5% over the next six months, compared with 1.2% in September – the highest level it has reached since the Nationwide House Price Index reported a peak in prices in October 2007.

Martin Gahbauer, Nationwide’s Chief Economist, said:

“While overall confidence among consumers remained static during October we did see some small adjustments to consumers’ perceptions of current employment and economic conditions, and their expectations of where these will be in six months’ time. It was largely expected that official figures released in October would show that the UK has come out of recession and this, along with further rises in house prices, may have helped to buoy positive sentiment towards the current situation during the month.”

“Surprisingly, however, the UK’s gross domestic product was reported to have contracted for the sixth consecutive quarter. Nonetheless, there does appear to be a growing belief among consumers that, while the current situation is still somewhat downbeat, the future outlook is brighter.”

Consumers also continue to be optimistic for the future of the economy. Despite a two point fall being reported in the Expectations Index, confidence in the future of the economy increased. A record 42% of consumers believe that the economic situation will be better in six months’ time than it is today, and just 15% believe it will be worse – the lowest level it has reached since the Index began in May 2004.