Consumer confidence proves resilient

The British shopper is trying their best to stay optimistic, according to the latest national survey of consumer confidence, by the Nationwide Building Society. Their index ticked down one point in October to 98, and seems relatively untouched by recent events, notably the run on Northern Rock. Consumer sentiment is now at the same level as a year ago, having recovered from weaker sentiment during 2007.

The Present Situation Index (how consumers feel about the current economic and employment situation) fell, but the Expectations Index (how consumers feel about the economic and employment situation in six months' time) was more upbeat, and was the only index to rise in October. However, economists usually warn that such surveys of sentiment are not always reliable guides to present or future spending, and should be treated with caution.

Fionnuala Earley, Nationwide's chief economist, said: "While there is a continued reluctance to spend, the credit crunch has not had a sharp effect on overall consumer sentiment, with consumers still very happy about the prospects in the labour market and for household finances. We will see some weakening in confidence as the economy begins to slow, although some of the effect may be offset by the cuts in the base rate we expect in 2008."

The Nationwide's numbers are much in line with the latest GfK/NOP survey, with both agreeing that shoppers seem especially wary of spending on household durables. The Nationwide survey suggests that the number of people who are confident about buying a major item such as a house or a car has seen a noticeable fall. Even so, the CBI and the British Retail Consortium report good business for the nation's car dealers.

The Nationwide Consumer Confidence Index uses a similar methodology to that of the US Conference Board, the key consumer confidence index in the United States.