Consumers get more confident, says Nationwide
Consumers in the UK became more confident in March and were more willing to spend, according to a survey by Nationwide Building Society.
Nationwide’s consumer confidence index rose from a score of 44 to 53 in March. This means that consumers were more confident about the current economic situation and were more willing to buy ‘big ticket’ items such as cars and holidays. Nationwide thinks that falling inflation was the most important factor behind the increased confidence.
If consumers are more confident, they’re more likely to spend and that, in turn, should boost economic growth. For that reason, economists and investors pay close attention to consumer confidence figures.
So you might think we’re about to see some decent economic growth this summer. Trouble is, the the Government announced some rotten economic numbers on Wednesday – in fact, we discovered that the UK has now returned to recession.
The return to recession has received plenty of coverage in the media and will almost inevitably damage confidence. That reduced confidence will damage the economy further.
Although March’s rise in confidence is sizeable, it’s worth stressing that confidence has been much higher in the past. For example, the consumer confidence score was 97 back in May 2004, much higher than the number for last month. What’s more, last month’s figure is 23 points below the long-term average.
The announcement from Nationwide follows this week's news that the UK economy has now returned to recession. In other words, the UK economy contracted in the last six months.
This latest gloomy economic news has received plenty of coverage in the media, so there’s a strong chance that consumer confidence will fall backwards in the next few months.
The Nationwide survey of 1000 people was conducted between February 20th and March 25th.
More on the economy:
UK inflation in surprise increase in March
Why the super-rich are good for us
Inflation basket: how Robert Pattinson and Apple affect our money
Three years of low interest rates: winners and losers
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"Er - Nationwide is a mutual building society, not a bank." I am aware of that, but they are currently acting in exactly the same was as any share holder profit driven bank rather than as the mutual they are supposed to be.
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Consumer confidence last year was all about the doom and gloom of hendreds of thousands of redundancies. That has not materialised so maybe people are feeling a little more confident. The same doom and gloom resulted in people cutting back on their spending so it is not surprising that we have had a recession. However, rising confidence is likely to make the recession short-lived. We shouldn't be worrying about what has already happened. It is what is going to happen that is important! As for people being pedantic as to whether Nationwide is a Bank or a Building Society, so far as I am concerned there is nothing to choose between them. The only difference is that some of the organisations have shareholders and have to answer to their largest investors and some are mutuals and their directors don't seem to have to answer to anyone-they cancel the membership of any who start to cause trouble. Mike
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Just goes to show how ill informed people are.
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01 May 2012