UK consumer confidence ahead of expectations

Date: Thursday 31 May 2012

GfK’s consumer confidence index for the month of May in the United Kingdom has improved to -29 points, from -31 in the month before.

The consensus estimate was for a smaller improvement, to -31.

Consumers’ expectations for the future registered the largest improvement, although most of the measures of confidence are far from where they were twelve months ago.

Perceptions of their personal financial situation throughout the last twelve months rose, with the index increasing to -23 points, from -18 in the month before, whereas the gauge for the next 12 months moved to -9 from -13.

The sub-index for the “general economic situation” in the last twelve months retreated slightly, by one point, to -58, but that for the next twelve months climbed sharply, to -26 from -33. In May 2011 the latter index was at -15.

The index which tracks the climate for major purchases also registered a small fall, to -32 points, from -30.

Commenting on the above data economists at Barclays are pointing out that, “current levels of confidence are around those seen at the depths of the 2008-09 recession, when growth was contracting much more sharply than the shallow recession that the economy is currently experiencing. This suggests that confidence may correct further in the medium term, in the absence of further downside shocks.”

For his part, Nick Moon, Managing Director of Social Research at GfK, is of the opinion that, “even though optimism about how the economy will perform over the next 12 months has risen by seven points in the last month, it is still significantly down on where it was this time last year.”

AB

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