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Published
May 11, 2012
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Consumer morale takes a knock

By
Reuters
Published
May 11, 2012

LONDON - Consumer morale in Britain worsened in April as people became more worried about the availability of jobs and shied away from buying big-ticket items like cars, a survey by lender Nationwide showed on Friday.


Photo: Corbis


The figures chime with surveys released on Wednesday which showed that British retail sales suffered their biggest annual fall in more than a year in April while the number of people placed in permanent jobs slowed.

Nationwide's consumer confidence index erased all of last month's gains, tumbling to 44 from March's nine-month high of 53, and was more than 30 points below its long-run average.

"The main consumer confidence index has see-sawed in recent months, with alternating rises and falls since September last year," said Robert Gardner, Nationwide's chief economist.

"Nevertheless, the index has consistently remained well below its long-run average, signalling ongoing caution on the part of UK consumers."

The fall was broad based, with consumers becoming more downbeat about both the current and future economic situation, the availability of jobs and their future household income.

"It is not surprising that confidence remains fragile, with the economy shrinking over the past six months and labour market conditions still weak," Gardner said.

A fall in inflation to 3.5 percent in March, from 5.2 percent last September, has helped households' purchasing power over the last six months but inflation is unlikely to retreat so sharply again in the near term, Gardner said.

The Bank of England voted on Thursday not to give the struggling economy another injection of cash as concerns over high inflation outweighed the risk of a prolonged recession and renewed dangers from the euro zone debt crisis.

News that Britain has fallen back into recession could weigh on consumer morale, but the Queen's Jubilee and the Olympics could provide a boost in the summer, Gardner said.

The survey was conducted between March 26 and April 22, before the Office for National Statistics published GDP figures for the first quarter, showing the economy shrank by 0.2 percent from the previous three months, pushing it into recession.

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