Consumers start to cheer up – but job worries hamper recovery

Consumer confidence index hits highest level for 18 months

• Katie Allen
• guardian.co.uk, Monday 2 November 2009
• Article history

The general mood of customers is better than a year ago but improvement has been been slow, says BRC director general Stephen Robertson. Photograph: Christopher Thomond

Consumer confidence has picked up to its highest level for 18 months, according to a survey published today. However, people remain anxious about losing their jobs and are still much gloomier than before the credit crunch began.

Sentiment about personal finances has improved marginally since last year and attitudes towards spending on discretionary items are more positive, claim market research company Nielsen and the British Retail Consortium (BRC). Their consumer confidence index rose to 75 in October – a 10-point gain on the all-time low of 65 in April. The figure is still weak compared with two and three years ago.

"When we saw confidence pick up between April and June we felt there was a definite and tangible change in the mood of the nation. However, we were cautious as quite often when economies rise out of recession there can be false starts, blips," said Nielsen's Justin Sargent. "This latest poll shows that the confidence of the nation continues to improve, though consumers remain very guarded."

A fifth of people now believe job prospects in Great Britain will be "good" or "excellent" over the next 12 months compared with just 14% in June. But adding those who think job prospects are "not so good" to those who say prospects are "bad" shows more than three quarters (77%) are still feeling negative.

"There's no question the general mood of customers is better than a year ago, when conditions were dire, but improvement has been slow so far," said BRC director general Stephen Robertson. "Half of consumers believe we'll still be in recession in a year's time. More than half are worried about jobs and their own finances and that will hold back full-scale retail recovery well into next year."

The survey suggests that worries about job losses mean people still in employment are working harder and there has been an increase in people feeling their work/life balance is their biggest concern, to 9% now compared with 4% a year ago.

There is more positive news for homeowners in the latest property market survey from Hometrack, the property intelligence group. It says house prices grew by 0.2% in October, marking the third consecutive increase. The annual pace of house price falls slowed to 4.2% from 5.6% in September.