The Nationwide Consumer Confidence Index remained flat at 52 in August, the first time confidence has remained static for over a year. An easing of petrol prices, reductions in new mortgage rates and even a little bit of Olympic cheer, may have contributed to supporting overall confidence this month.
While the Present Situation Index and the Spending Index ticked down three and two points respectively during the month, there was a marginal upturn in the Expectations Index which rose from 54 in July to 56 in August.
Fionnuala Earley, Nationwide's chief economist said: "Economic uncertainty continues to affect sentiment around spending and employment, but it seems that consumers are beginning to take a realistic view of the future and are factoring in the possibility of tougher times ahead. Lower petrol prices and more competitive new mortgage rates will be good news for the public. Team GB's Olympic performance in Beijing may even have helped lift the nation's spirits slightly this month."
Sentiment about current economic situation remains gloomy...
Consumers' views on the current economic situation continued to worsen in August with almost two thirds (65%) of those questioned believing the current situation is bad compared to 61% in July. A quarter (25%) of consumers think the economic situation today is normal and just 9% believe it to be good. This is not surprising given recent news of rising inflation and unemployment.
....but views on the future economic situation see a slight improvement
Sentiment about the future economic situation improved slightly in August, with the percentage of those believing that the economic situation will be worse in six months' time decreasing marginally from 60% in July to 57% in August. Over a quarter (28%) now think that the situation will be the same in six months' time - three percentage points higher than last month (25%).
Consumers still wary of current and future employment situation
Views on the current and future employment situation deteriorated once again in August. This is likely to have been fuelled by an increase in unemployment. Nearly a third (31%) believe there are not many jobs available today and 47% think that there will be few jobs available in six months' time, up five percentage points from 42% in July.
Further reluctance to spend on major purchases
Consumers are still pessimistic about making large purchases such as a house or car. Over two-thirds (68%) of those questioned believe now is a bad time to make a major purchase compared to 64% in July and 49% this time last year.
Consumers' expectations about house price growth over the next six months saw a marginal improvement, with the Nationwide House Price Expectations index rising from -4.8% in July to -4.6% in August.
