The report revealed that after a gloomy early summer, confidence has stabilised at a more positive level. The index remained broadly stable in August at 100, compared to 101 in July and 95 in June.
The Base Rate cut had a positive impact by boosting expectations about the future. In the fortnight prior to the decision, the index stood at 98; afterwards it rose to 101. However, due to such a close vote in August, it is unlikely the Monetary Policy Committee will vary rates in September and probable that the Bank of England will leave them unchanged for the remainder of 2005.
The biggest area of uncertainty surrounds employment. The incr-ease in unemployment numbers over the last six months as well as the negative media coverage of the figures has affected confidence in employment prospects.
In August, the number of people believing that there were currently many/some jobs available fell to its lowest level since Nationwide began measuring confidence at 56 per cent. Confidence in jobs available in the future has also fallen to 47 per cent.
Stuart Bernau, Nationwide executive director, said: “With only a marginal reduction in August, consumer confidence appears to have stabilised. The figures illustrate that while consumers are uncertain about the current economic situation, they’ve become more positive about how the future will unfold.”
Jonathan Cornell, technical director at Hamptons International Mortgages, agreed with the findings. He said: “Consumers are more confident about interest rates, house prices and the economy. Those who have been putting off the decision to buy are now entering the market. But another interest rate cut is unlikely until next year.”
