UK consumer morale drops in September

Julian Harris
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CONSUMER morale sunk again last month, in a worrying sign for the domestic UK economy.

The widely regarded Nationwide consumer confidence index sunk for the fourth straight month, it revealed this morning.

The index fell to 45 points in September, from 48 points in August. At the same time last year, September 2010, the index was 10 points higher, at 55 points.

“The index now lies perilously close to its all-time low reading of 41, which was recorded in February this year,” said Robert Gardner, chief economist at Nationwide.

The proportion of people likely to buy household goods or make major purchases slipped again last month, yet remains surprisingly “resilient”, according to the Nationwide.

While half the respondents feel that now is a bad time to make a major purchase (up from 47 per cent in August), over a quarter (27 per cent) still feel it is a good time to buy household goods.

“The spending sub-index fell by two points but remains some way above its all time lows, despite the challenging economic environment,” the report said. Despite a fairly robust willingness to spend, consumers’ views of the economy are extremely downbeat, the survey found.

The proportion of people who consider the economic situation to be “bad” rose to 71 per cent in September, up from 68 per cent in August. The overall “present situation” sub-index, which records sentiment over the economy and job prospects, dropped a further two percentage points in September.

“Interestingly, there was very little change in consumers’ views towards the future state of the economy, despite the gloomy headlines evident in recent months,” added Gardner.

“But this is probably a reflection of their already low expectations -- just 15 per cent of people believe there will be an improvement in the economy over the next six months.”

Nonetheless, the expectations sub-index, which measures people’s economic sentiment for the coming six months, decreased by three points to 62 in September.