Consumer confidence slips back, suggesting fragility

 

Consumer confidence dipped slightly this month, according to a leading survey, suggesting the UK’s recovery might be fragile. The overall Consumer Confidence Index, compiled by polling firm GfK on behalf of the European Commission, declined to minus 11 in October, breaking a run of five straight months of increases.

The index plummeted to  minus 34 in 2008 and remained at similarly depressed levels until earlier this year when it improved dramatically, rising from minus 27 in April to minus 10 in September as a succession of positive economic data hit the headlines.

Nick Moon, the managing director of social research at GfK, said the latest slippage might be a “pause for breath” but added it was too early to be sure. “It will be interesting to see if sentiment has run away with itself and there is a further drop next month,” he said. Respondents to the survey reported that their expectations for their personal finances over the next 12 months were lower. Views of the general economic situation over the next year also dropped.

The GfK/EU results follow a separate survey earlier this week that put confidence at its highest level for six years in the three months to September. The Nielsen Global Survey of Consumer Confidence and Spending Intentions said the UK confidence index jumped eight points on the previous quarter to 87, the joint fourth-highest increase among 60 countries measured.

A separate survey of business confidence yesterday suggested optimism is at its highest level since 2002. Some 72 per cent of firms questioned this month in the Lloyds Business Confidence Barometer said they were more optimistic about the economy than three months ago while just 9 per cent said they were less optimistic. 61 per cent of the 300 surveyed firms with turnovers of more than £1m said they expected their own trading prospects to improve, up from 59 per cent in September.

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