Consumer confidence erodes further

This Is Money13 April 2012

Consumers' confidence continued to fall during June as people became increasingly pessimistic about job prospects and the state of the economy.

Nationwide Building Society said people's confidence in the jobs market fell by 12% during the month, hitting their spending outlook.

They were also less optimistic about the employment situation going forward, meaning confidence in jobs is now at its lowest level since the society launched the index just over a year ago.

At the same time people's confidence in the current economic situation fell by 5%, while optimism about the state of the economy in six months time was also down by 5% compared with the previous month.

Their confidence in house prices has also fallen, with people now expecting the cost of property to increase by just 1.5% over the coming six months, down from 2.6% in April.

However, consumers were slightly more confident about making a major purchase, with this rising by 4% month-on-month.

The society said overall, each of the seven confidence indicators it tracks had fallen since January, which it said was reflected in the weakest retail sales figures since 1999 in May.

But it said despite speculation that the Bank of England's Monetary Policy Committee (MPC) could cut interest rates as early as this week, there was a 75% probability that they would remain on hold.

Alan Oliver, Nationwide's head of external affairs, said: 'Over the last six months, all seven indicators of confidence have fallen, reflecting the fact that people are feeling increasingly uncertain.

'Consumers now feel less positive about how things are today, as well as how things will be in the future, something we didn't see last month. As this negative sentiment gathers momentum it is something the MPC will find increasingly difficult to ignore.'

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