Consumer confidence down

CONSUMERS' confidence in the state of the economy and their own personal finances has dipped dramatically, it was reported today.

The Nationwide said there was growing uncertainty across a range of indicators in March, including the economy, employment and spending. There was a marked shift from people feeling positive to people being uncertain in six of the seven indicators - the highest level since the building society began tracking consumer confidence in June last year.

The fall in confidence has been reflected in a number of other industry measures: the CBI recently reported retail sales fell in March, companies including Boots, House of Fraser, Jessops and Next have reported disappointing sales, and the level of equity withdrawal and consumer credit borrowing have both shown recent falls. But although confidence has dipped, the fall must be viewed in context, the building society stressed.

The fall in March was from a relatively high level as in February expectations of future household income, future job availability, the future direction of the economy and confidence regarding spending on major purchases were all at the highest level recorded. In addition, confidence in the outlook for house prices remains stable. Having fallen to a low in November, house price expectations have improved, primarily driven by a reduction in those expecting house price falls.

The survey shows consumers expect price rises of 2.7% in the next six months confirming Nationwide's view of a soft landing for the housing market.Confidence fell in six of seven indicators:
The current UK economic situation - down 3 percentage points
The current employment situation - down 12 percentage points
Future employment prospects: down 14 percentage points
Future household income: down 1 percentage point
Spending confidence for household purchases - down 9 percentage points
Spending Confidence for major purchases - down 8 percentage points

Confidence rose in just one indicator:

Future UK economic situation: up by 3 percentage points

Stuart Bernau, Nationwide's executive director, said: "There has been a notable downward shift in consumers' confidence levels in March. With an election looming, more people are unsure whether they will be better or worse off in a few months time.'This is a key moment for all political parties to capture the hearts and minds of voters in the crucial area of their economic well-being. The election has come at an interesting time with consumers becoming more uncertain about the state of economy and employment prospects.'