Consumer confidence on the up, surveys show

CONSUMER confidence and retail sales picked up in November and December, according to new data from surveys and retailers – but researchers are divided on whether the high will last.

Research group Markit found 41 per cent of households it surveyed had spent more money this month than in December last year, and just 20 per cent had spent less.

The results were echoed in the John Lewis Partnership’s weekly sales data, which showed the department store’s sales up seven per cent year-on-year to just over £120.3m, its second-highest level this year after the previous week’s take of £121m.

Sales were boosted by home furnishings to entertain guests; outerwear due to the cold weather, and gifts, the group said.

Waitrose’s sales were also up seven per cent to £131m, it said.

Brokerage house Execution Noble also published its Spend Trend survey of consumers, which showed consumer confidence rising significantly in November.

Its consumer confidence index rose 11 points – though the index still stands at the lowest level since February 2009.

Despite the low score, Execution Noble believes confidence will remain strong as it believes people’s expectations of public sector redundancies are overblown and consumers are already braced for a financially difficult 2011.

“We see potential for a relief bounce amongst public sector workers which should drive further improvements in consumer confidence,” the report said.

But the VAT rise to 20 per cent from January could dampen confidence and further erode household finances, the Markit survey showed.

It found that about 42 per cent of households expected their finances to worsen, while just 21 per cent expected an improvement. 

“People have seen their spending power gradually eroded by stubbornly high inflation throughout the year and little in the way of income growth to compensate for this,” said Markit economist Tim Moore.