Another bleak indicator of the state of the retail sector has been published today, with the news that consumer confidence has continued to decline in this month.
The GfK NOP consumer confidence index for July shows a five per cent fall to -30, just one point above the two-year low recorded in March.
In the poll of 2,000 adult consumers, opinions on the general economic situation over the next 12 months was the indicator which showed the steepest decline, of -9 per cent, closely followed by the perception of the economy over the last year which was down seven per cent.
Nick Moon, Managing Director of GfK NOP Social Research, commented: “Consumer confidence has shown the second major fall in a row, returning to the depths of the first quarter of this year.
“It’s becoming clear that May’s positive surge was the exception rather than the norm, as we return to -30 – wiping out almost all of May’s rise.
“Before this year, the index has only twice been lower in its 37-year history: during the recessions of early 1990 and mid-2008.”
National spirits and were raised briefly in May of this year, due to the royal wedding and sunny bank holidays, and consumer confidence jumped ten points during the month to a high for 2011 of -21.
It now seems that this optimism was an aberration rather than the start of a recovery with two months of steep declines following, and with over half of 2011 gone it has been the only month this year with a score higher than -28.
On Tuesday the Office for National Statistics announced that the UK economy had grown by only 0.2 per cent and confidence in a swift return to strong growth seems to be disappearing amongst the general public.
All five indicators of GfK NOP’s index, including opinions on future and past personal finances and the climate for major purchases, took a hit in July and Moon warns that cautious consumers are set to continue to make trading tough for retailers.
With big name retailers such as TJ Hughes, Focus DIY and Habitat all filing for insolvency so far this year, further tightening of belts is a major threat to UK retailers.
Moon added: “What will concern the government most is that the biggest drop of nine points was in people’s expectations of the performance of the economy over the next 12 months.
“When combined with people’s pessimistic expectations for their own finances over the next year, retailers can expect tough conditions to persist for a while yet – threatening an already fragile recovery.”