Consumer confidence declined unexpectedly this month, falling to -27 after a period of steadiness, causing analysts to warn that recovery in the consumer sector this year is “unlikely”.
According to the GfK/NOP Consumer Confidence Index, public feeling on the economy has worsened, decreasing one point in April, while the measures for personal financial information over the previous and coming 12 months and also climate to make major purchases have all posted decreases.
Over the month, the index measuring changes in personal finances during the last 12 months fell four points to -24, one point lower than a year earlier while the index for the next 12 months dropped one point to -7, six points higher than the same period in 2012.
Confidence in making major purchases has dipped to -25, down two points on a month previously though five points higher than this time last year, while sentiment for saving has stayed the same at -23, five points below that of April 2012.
Commenting on the disappointing figures, Nick Moon, Managing Director of Social Research at GfK said: “After three months of stability, the next move of the Index was always going to be important.
“A move up would suggest that the Index had indeed “paused for breath” after its rise at the end of 2012 and was still heading in the right direction.
“But instead the fall back, even though by only one point, implies the recovery in confidence has stalled, and real recovery looks a long way away.”
April’s declining levels of confidence highlight uncertainty following flat retail sales over the month after the CBI’s Distributive Trades Survey revealed that sales remained “broadly unchanged” in the year-to-date, the lowest balance since last August.
Michael Pearce, Assistant Economist at Capital Economics, said that, although there are reasons to believe that the economy may pick up in the months ahead, consumers remain reluctant to spend despite the introduction of new-year tax measures.
“April’s slight fall in the level of consumer confidence provides further evidence that the consumer sector won’t see a meaningful recovery this year,” said Pearce.
“With employment falling and real pay contracting, we expect consumer spending will remain in the doldrums for a while yet.
“The economy remains weak. Crucially, employment is now falling, and the fact that nominal earnings didn’t grow over the past year highlights the difficult position consumers are in.
“Sentiment is unlikely to pick up while consumers’ finances remain under such considerable pressure.”