UK consumer confidence high despite credit levels
Consumer confidence in the UK is holding up in the face of the recent credit crunch, figures showed today.
Nationwide Building Society said its Consumer Confidence Index fell by just one point to 98 during October.
This put it at the same level it was at this time last year, and above weaker levels of 83 and 84 seen at the end of 2006 and beginning of 2007.
The group said people were feeling more gloomy about their present situation, with the index that measures people's confidence in the economy and employment situation dropping by three points.
At the same time their willingness to make big purchases continued to decline, with the group's spending index dropping by seven points during the month, its largest fall since March, reducing it to its lowest level since December 2006.
Just 14% of people think now is a good time to make a major purchase such as a car or a house, down from a high of 33% in November 2005.
Nationwide said some of this decline may be due to lower expectations for house price growth, while it may also have been affected by people's perceptions about the availability and cost of credit as a result of the credit crunch.
But the group said people felt more upbeat about the future, with their confidence in the economic and employment outlook in six months' time the only measure that increased during October.
The number of people who feel negative about the outlook for jobs fell to its lowest level since February 2005 during the month, with only 21% of people thinking there will be few jobs available in six months' time.
But the group added that people were not expecting the labour market to take off, and most of the change in sentiment was to a neutral rather than a positive position.
Fionnuala Earley, Nationwide's chief economist, said: "Consumers' confidence seems, so far, to have remained resilient in the face of the recent highly visible upset in the financial markets.
"While there is a continued reluctance to spend, the credit crunch has not had a sharp effect on overall consumer sentiment with consumers still very happy about the prospects in the labour market and for household finances.
"Looking forward, it is likely that we will see some weakening in confidence as the economy begins to slow, although some of the effect may be offset by the cuts in the base rate we expect in 2008."
The group found that people now expect house prices to rise by only 1.9% during the coming six months, compared with predicted growth of 3.2% in September, as the property market continues to slow down.
