Consumer Confidence Falls Amid Fears Over Economy And Jobs

Consumer Confidence Falls Amid Fears Over Economy And Jobs

Consumer confidence fell back last month as fears over the economic climate took hold, according to mortgage provider Nationwide.

Nationwide said its consumer confidence index fell by three points to 44 in February, well below its average.

The drop came despite easing inflation and improved industry surveys for the manufacturing and service sectors at the start of the year.

A general malaise in the economy and higher levels of unemployment may have dented consumer confidence, the building society said.

Robert Gardner, Nationwide's chief economist, said: "Consumers also scaled back their expectations for the future, with the forward-looking aspects of the index weakening during the month.

"Even though interest rates remain at historic lows and the Bank of England opted to inject another £50 billion into the financial system in early February, weak labour market conditions combined with weaker than expected economic growth are continuing to weigh on confidence."

The downbeat survey comes amid mixed signals for economic prospects.

The tax and spending watchdog, the Office for Budget Responsibility, earlier this week lifted its growth forecast for 2012, though many economists said the prediction was too optimistic.

Furthermore, retail sales figures showing a sharp decline in February and lower-than-estimated growth in January have darkened the outlook.

However, Nationwide said other more positive indicators provide some hope that the latest dip in confidence will not mark the beginning of a renewed downward trend.

Meanwhile, respondents said they were less inclined to spend on household goods.

Mr Gardner continued: "Falling inflation and the price cuts announced by the UK's big energy suppliers may have left consumers feeling hopeful that the squeeze on household budgets will ease, which would boost their spending power.

"Given the uncertain economic outlook, it is no surprise that consumers remain cautious about making major purchases, with nearly half of all respondents thinking it is a bad time to make a major purchase."


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