The Nationwide Consumer Confidence Index rose by marginally in March, to suggest confidence appears to have stabilised in March, following a steady decline since November.
March saw the Nationwide Index rise one point to 95, with the other indices, of present situation, expectations and spending, either rising slightly or remaining stable, suggesting consumers remain cautious despite signs the economy is beginning to recover.
Three of the four indices, compiled in partnership with TNS, have risen marginally in the last month, but all of them are still below their three month averages.
Nationwide claims consumers’ views of the current economic and employment situation remain gloomy with the Present Situation Index having seen only a one point rise from the all time low reported last month.
However, looking forward, views of prospects for the future remain stable, with the Expectations Index showing no change, although this masks concerns about income, as the number expecting household income to drop within six months rose to an all time high of 11% in March.
The Spending Index also saw a modest rise of one point following its eight point fall last month, even though current indicators point to further subdued retail spending. But the outlook seems to be gradually improving, partly because of the recent strength of the housing market, which could encourage consumers to spend more.
Meanwhile, Nationwide says despite the recent strong performance in the housing market, consumers’ expectations of house prices remain muted, as people now expect house prices to rise 2.2% in the coming six months, down from 2.4% in February.
As a result, it says the small fall means consumers’ expectations continue to be in line with Nationwide’s own forecast of a 0-3% change over the year.
Stuart Bernau, executive director of nationwide, says low confidence and continued caution on the part of consumers pose challenges to the economy and the monetary Policy Committee (MPC), as the Budget was largely neutral from the consumer’s point of view.
He adds: “The MPC is reluctant to cut interest rates due to price pressures and some better economic news, but it is beginning to express more concern about the continued sluggishness of consumer spending after a strong Christmas. The prospect of weak consumer spending poses the largest risk to the MPC’s optimistic forecast for the economy.”
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