20 things

20 things you should know about

10 March 2007

1 The Nationwide Consumer Confidence Index revealed that confidence picked up in February to 85 points.

2 However the study indicated that this was still below the 94 recorded immediately before the recent Base

Rate rises.

3 Looking at the present economic and employment situations, many consumers were wary, with the Present Situation Index falling by 2 points.

4 The Present Situation Index recorded a level of 84 in February, its lowest level ever.

5 The number of people who were positive about the current economic situation fell to 35 per cent.

6 The number of people who thought there were few jobs currently available rose to 29 per cent, the highest level since August 2006.

7 The Nationwide Consumer Confidence Index Spending Index revealed an improvement in spending confidence. The lender indicated that this was driven by fewer consumers feeling it was a bad time to make major household product

purchases.

8 The number of consumers who thought it was a bad time to make a major purchase fell to 39 per cent, down from 45 per cent in January 2007.

9 The number of people positive about the economy in six months rose to 13 per cent in February from 11 per cent in January, the study indicated.

10 33 per cent of consumers were negative about the six month cycle of the economic situation, Nationwide reported.

11Consumers were not as confident about household income in February as they were in January.

12 Consumers who thought their income would be higher in six months’ time fell to 29 per cent, from the January findings of 31 per cent.

13 Commenting on the findings, Fionnuala Earley, chief economist at Nationwide, said: “The Nationwide Consumer Confidence Index seems to be showing that consumers are responding to the three increases in interest rates. All of the indices are well below the levels recorded before the first rise in rates. Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed which suggest a fairly stable economic background.”

14 The lender also revealed that 40 per cent of consumers expected a further Base Rate rise, while 60 per cent argued for ‘no change’.

15 Earley, added: “The Monetary Policy Committee is clearly in hawkish mood, but its members should take some heart that consumers are responding to its recent rate decisions.”

16 Consumers’ expectations of future house price growth saw very little change in February, falling by 0.1 per cent to 3.4 per cent.

17 This represented a 1 per cent rise from 12 months ago. The impact of higher rates was beginning to impact on housing demand, which will feed into lower house price growth as current and potential home owners evaluate their financial position before investing in bricks and mortar, Nationwide reported.

18 The Nationwide Consumer Confidence Index is based on a similar approach to that used by the US Conference Board, which produces the highly regarded US Consumer Confidence Index, which has run since 1967 and is widely acknowledged as a key economic indicator.

19 The Nationwide Consumer Confidence Index is compiled in partnership with TNS, the market research group that conducts the research for the US index.

20 The Nationwide Building Society’s Consumer Confidence Index was first published in

May 2004.