20 things

20 things you should know about….

12 May 2007

1 The Nationwide Building Society’s April Consumer Confidence Index, in partnership with TNS, revealed that consumer confidence rose to its highest point since 2006.

2 The lender’s index indicated that consumers had recovered from the recent three interest rate rises.

3 However, Nationwide revealed that 10 per cent expected a further Bank of England Base Rate increase of 0.50 per cent.

4 80 per cent expected the Base Rate to increase by 0.25 per cent, while 10 per cent expected it to remain the same.

5 None of the respondents expected the Base Rate to go down.

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6 Looking at the expectation index, the consumer confidence paper indicated a rise of two points, representing the fourth consecutive monthly rise.

7 Consumer spending confidence also picked up according to the report, increasing by six points, to 89.

8 However, according to the monthly report, spending confidence dropped by 18 points from last year’s findings.

9 The spending index was the only index of the study to be at its three-month average, and not above it, Nationwide revealed.

10 Confidence in making a major or household purchase, such as a dishwasher, picked up in April, following an 11 point fall in March.

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11 The amount of people who believed it was a good time to make a major purchase, such as a car, increased by 2 per cent, to 21 per cent, from the March findings of 19 per cent.

12 The number of people who believe that now is a good time to make household purchases, such as white or brown goods, rose from 40 per cent in March, to 43 per cent in April, the index indicated.

13 The Nationwide Building Society Consumer Confidence Index also reported that consumers’ feelings about their household incomes in six months’ time remained stable. Nationwide attributed this to the fact that the proportion of consumers who expected there to be an average, or higher number of jobs in six months’ time had not fallen below 50 per cent since the survey began.

14 28 per cent of people questioned for the consumer confidence index believed there would be fewer jobs available in six months.

15 This was 5 per cent down from the March findings of 33 per cent.

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16 Consumers’ expectations of future house price growth also improved in April, with consumers expecting house prices to rise by 3.5 per cent over the coming six months. This was an increase from 3.2 per cent in March.

17 Commenting on the Nationwide Consumer Confidence Index findings, Fionnuala Earley, chief economist at Nationwide, said the data suggested that although consumers had absorbed the recent interest rate hikes, there may be more to follow. She explained: “This increase in confidence suggests that consumers have come to terms with the recent Bank of England Base Rate rises. But with inflation more than 1 per cent above target, it seems likely that the Bank’s Monetary Policy Committee will this week increase rates at least one more time.”

18 Earley added: “The extent to which this hits consumers’ confidence will, to some extent, depend on the impact of falling utility prices this Summer against higher debt repayments.”

19 The Nationwide Consumer Confidence index is based on the US Conference Board model.

20 The expectations information is based on a balance of people who believe house prices will be higher in six months’ time, against those who believe they will be lower.

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