A welter of poor data about the British economy was released yesterday, with the pall of gloom extending across households, the construction industry and the jobs market. The Nationwide Consumer Confidence Index fell to a new low last month, and the proportion of people thinking economic conditions were "bad" rose from a quarter to a third.
Respondents said they expected house prices to fall by 1.1 per cent over the coming six months, while just 11 per cent said they were confident that now was a good time to make a major purchase. However, there were some glimmers of hope. Britons are more cheerful about the medium-term and about the outlook for jobs, the Nationwide found.
The Expectations Index, which reflects people's feelings about the situation in six months, was the only figure not to deteriorate in February. But while people seem upbeat about employment, the reality may be more worrying. Permanent staff placements fell in February for the first time in about five years, according to the Recruitment and Employment Confederation and KPMG's latest Report On Jobs. The decline in placements reflected a further slowdown in demand for permanent staff and continued shortages of skilled workers, the report said. However, bookings for temporary and contract staff rose at their fastest pace for three months, the authors added.
Meanwhile, wage inflation continued to ease. Alan Nolan, a director at KPMG, said: "The credit crunch and discussions about recession have taken their toll. The number of temporary appointments has grown at the fastest pace in three months, suggesting that employers are dealing with the uncertainty in the economy by moving towards a more flexible labour force."
There seems little chance of the property market pushing the economy forwards. Growth in the construction indsutry slowed last month to its weakest rate since June 2006, according to the Chartered Institute for Purchasing and Supply. Its seasonally-adjusted index for construction fell to 52.4 from 53.9 in January and the residential sector contracted at its fastest rate in 22 months. The new orders index fell to 52.1, its weakest rate in 75 months. Input price inflation rose to a 19-month high of 73.0, with firms reporting higher prices for fuel and metals.
The bad news comes a week before Alistair Darling's his first Budget and as the Bank of England prepares to announce new interest rates tomorrow. The consensus is that the Bank will keep rates on hold but economists expect them to fall later.
Michael Saunders, of Citi European Economics, said: "CPI inflation in February is likely to spike higher as the recent jump in retail gas and electricity prices comes through. Our forecast is for inflation to rise to 2.6 per cent in February from 2.2 per cent in January. These inflation worries will probably not totally prevent the [Bank] from cutting rates in coming months but they will constrain the pace of easing. If so, an April rate cut is on the cards."Reuse content