EEF Economics Blog | All posts tagged 'consumer confidence'

2012 Q1 GDP: where are we now?

Felicity Burch April 24, 2012 09:30

Ahead of tomorrow's GDP release for the first quarter of 2012, what do the most recent economic indicators suggest about the state of the UK Economy?

↑ Manufacturing PMI	At the end of 2011 the Markit/CIPS Manufacturing PMI had moved firmly below 50, signalling a contraction in the sector. However, since the turn of the year, the indicator has been in positive territory, recording its highest reading for ten months in March.

↔ Manufacturing output	Manufacturing output has had a weaker start to 2012 than some of the business surveys might have suggested, and ONS data showed that it contracted in February this year. However, on a three-monthly basis output rose by a modest 0.2%.

↑ Service sector	Markit/CIPS Services PMI has been firmly positive since the start of 2012, with the most recent survey suggesting growth in the sector was the strongest since the second quarter of 2010.

↓ Construction sector	ONS reported two large monthly falls in construction output in December and January pointing to a sharp fall in output in the first quarter, despite relatively positive survey responses.

↑ UK Trade	Although ONS trade data weakened slightly in February, there was an improvement in the 3-monthly data, following record-high exports to non-EU economies at the end of 2011.

↔ Consumer confidence	Consumer confidence has had a shaky start to the year. GfK NOP’s Consumer Confidence Index ended 2011 at -31 and, after improving slightly, has returned back to -31. This is a level generally associated with recession and suggests there is some way to go before household spending returns to form.

↑ Retail sales	After a weak February, ONS data showed that sales bounced back in March. Although the increase was partly a result of people buying fuel stores ahead of the threatened petrol strikes, it was in line with the latest BRC-KPMG Retail Sales Monitor which also suggested that retail sales strengthened in March.

↓ Credit conditions	The Bank of England’s Agents found that a sizeable minority of firms had seen a rise in the cost of finance. In the more recent Trends in Lending release, the Bank reported that net lending to businesses contracted £4bn in February, while consumer credit remained subdued. In addition, the Bank’s latest Credit Conditions Survey showed that availability of credit to households was expected to tighten.

↔ Forecasts	Forecasts for growth in 2012 have remained relatively down-beat. The Treasury’s Comparison of Independent Forecasts in April showed a range between a contraction of 0.5% and growth of 1.5% over the year. The median forecast currently stands at 0.6%. Although forecasts have improved modestly since January when they fell within a range of -1.3% and 1.7%, with a median forecast of 0.4%, in either case the median forecast would not rule out a contraction in the first quarter of this year.

So what does all this mean for tomorrow’s GDP release

Tomorrow’s release – be it positive or negative – is likely to confirm one thing: this recovery is patchy and unsteady. The Bank of England’s recent minutes note that the arithmetic affects of a sharp contraction in construction at the beginning of the year will knock the GDP figure down. This may well mean that UK output fell in the first quarter of 2012, pushing the economy back into technical recession. But as recent data reveal, the overall picture is much more mixed.

Tags: gdp, economy, economic data, manufacturing pmi, manufacturing output, services, construction, uk trade, consumer confidence, retail sales, credit conditions, forecasts, growth

Week in Review - 2nd March, 2012

Felicity Burch March 02, 2012 09:55

↔ GfK NOP Consumer Confidence Index	The consumer confidence index remained stable at the low-level of -29. Although consumers felt that the climate for major purchases was less positive, this may be a seasonal factor following the January sales. It was also offset by an improvement in sentiment about the state of the economy and personal finances over the coming year.

↓ Manufacturing PMI	The manufacturing PMI fell back a little, to 51.2, but remained above the 50-level associated with expansion in the sector. Production increased for the third month in a row, and orders remained stable, with weakness in Europe offset by increased demand in the US and Asia.

The week ahead

Thu 8^th: MPC decision
Fri 9^th: Index of Production; UK Trade; Producer Price Index

Tags: consumer confidence, manufacturing pmi, pmi, week in review, economic data

Week in Review - 3rd February, 2012

Felicity Burch February 03, 2012 09:43

↑ GfK NOP Consumer Confidence Index	The consumer confidence index improved to a six-month high, though at -29 it remains depressed. The biggest improvement was in the sub-index for consumers’ expectations of the next twelve months. However, there is little evidence from official data that this has started to feed through to economic activity yet.

↑ Manufacturing PMI	January’s PMI moved back above the 50-level associated with expansion to 52.1, an eight-month high. Output and new orders were both up, though growth in export orders softened slightly.

The week ahead

Thu 8^th: MPC interest rate decision; Index of production; UK trade;
Fri 9^th: Producer prices

Tags: consumer confidence, pmi, week in review, economic data

Week in Review - 2nd December, 2011

Felicity Burch December 02, 2011 11:27

↑ Lending to individuals	Total net lending to individuals rose by £1.3bn in October, with lending secured on dwellings rising by £1.3bn and consumer credit broadly unchanged.

↔ GfK Consumer Confidence index	The Consumer Confidence indicator edged up slightly from to -32, from -31, though this remains an exceptionally low level. Consumers felt that the environment for making major purchases had improved slightly however, they were more concerned with the outlook for the next twelve months.

↓Manufacturing PMI	November’s manufacturing PMI was close to a two-and-a-half year low of 47.6. Demand became weaker in domestic and external markets, with consumer-facing companies experiencing the sharpest contraction. One result of this is that companies reported a fall in input prices in November.

The week ahead

Tue 6^th: Annual Survey of Hours and Earnings (ASHE)
Wed 5^th: Index of production
Thu 8^th: MPC rate decision
Fri 9^th: UK Trade; Producer Price Index

Tags: lending to individuals, consumer confidence, pmi, week in review

Week in Review - 28th October, 2011

Felicity Burch October 28, 2011 11:03

↑ Balance of Payments	The UK’s current account deficit fell to £2.0bn in 2011q2, from £4.1bn in 2011q1. However, the total trade deficit widened to £6.8bn in 2011q2 from £5.8bn in the previous quarter.

↓GfK NOP Consumer Confidence Index	The Consumer Confidence indicator fell to -32, from -30, and is now at a level normally associated with recession. Looking ahead there falls in the sub-indices related to consumers’ expectations for the economy in the next twelve months and the climate for major purchases.

The week ahead

Mon 31^st: Lending to individuals
Tue 1^st: GDP (Q3 preliminary estimate); Manufacturing PMI

Tags: week in review, balance of payments, trade, consumer confidence

GfK NOP consumer confidence indicator falls again in October, to -32

Felicity Burch October 28, 2011 09:00

If there’s one thing that the forecasters got right, it’s that this recovery was never going to be driven by consumption.

Last week’s retail sales figures provide an example. Although stronger than expected in September, the 3m/3m figure showed total sales fell by 0.2% and core sales fell by 0.1%.

There is an upside to this, as the Governor of the Bank of England pointed out in answer to questions from the Treasury Select Committee on Tuesday: the UK savings ratio has now risen to 7.4%. This means indebtedness is falling. But, this deleveraging on the part of consumers goes well beyond what many forecasters thought would be the case and this has implications for growth and subsequently the government’s ability to meet its fiscal targets.

Given the downbeat economic news from the Eurozone in the last month, today’s return of the consumer confidence figures to recessionary levels is not surprising, but it suggests that sluggish household spending, and the subsequent downward pressure on growth, is set to continue.

GfK NOP Consumer Confidence
Consumer Confidence Index falls to -32

Source: GfK NOP, 2011

Tags: consumer confidence

Week in Review - 29th July, 2011

Felicity Burch July 29, 2011 11:26


↓ GDP Q2	ONS estimated that GDP grew by 0.2% in the second quarter of the year. Growth was weakened by the supply-chain impacts of the Japanese tsunami and the additional Bank Holiday. Manufacturing, in particular, was knocked back by the tsunami, and output contracted by 0.3% over the quarter. Services output was stronger, growing by 0.5% and construction output also grew by 0.5%.

↓ GfK Consumer Confidence	GfK NOP's Consumer Confidence Index fell to -30 in July. Confidence fell across all sub-indices. Concerns about personal financial situation in the next twelve months worsened, but the biggest drop, of 9 points, was in people’s expectations of the performance of the economy over the next 12 months.

↑ Lending to individuals	Total lending to individuals rose £0.4bn in June, within the total, lending secured on dwellings fell by £0.1bn, and consumer credit rose by £0.4bn.


The week ahead

Mon 1^st: Manufacturing PMI;

Thu 4^th: MPC rate decision

Fri 5^th: Producer Price Index

Tags: gdp, consumer confidence, trends in lending

GfK Consumer Confidence Index falls further, to -30, in July

Felicity Burch July 29, 2011 09:00

In our Economic Prospects report we said that we expect consumer spending to be weak this year, as a slow recovery in the labour market and below-inflation wage growth continue to subdue demand. One of the indicators we are watching is the consumer confidence index, which was released today.

GfK NOP's Consumer Confidence Index fell to -30 in July

Movements in GfK NOP’s consumer confidence index are not always mirrored by similar movements in consumption, but the index does give an indication of consumers’ mood and inclination to spend at any one time. Today’s release shows that confidence fell across all sub-indices and, therefore, would suggest that consumption is likely to remain subdued. Concerns about personal financial situation in the next twelve months worsened, but the biggest drop, of 9 points, was in people’s expectations of the performance of the economy over the next 12 months.

Tags: consumer confidence, economic prospects h2

Week in Review - 27th May, 2011

Felicity Burch May 27, 2011 11:30

↓ Public Sector Finances	Public sector finances worsened in April, with borrowing significantly higher than had been expected as a result of stronger government spending, and slightly weaker tax receipts. The deficit was the largest April deficit on record.

↔ GDP	The figure for GDP growth in the first quarter of 2011 was unrevised, at 0.5%. Although household spending and business investment fell, net trade improved considerably.

↓ Business investment	Business investment fell 7.1% in the first quarter of 2011. Manufacturing investment also fell, by 1.2%. However, investment by manufacturers was 14.8% higher than at the same point in 2010.

↑ GfK NOP Consumer Confidence	The GfK NOP consumer confidence index jumped steeply in May, rising ten points to -21. This was the second-largest one-month rise in the survey’s history. There are several temporary factors such as the Royal wedding and bank holidays which could have contributed to this, so it remains to be seen whether this will be sustained.

The week ahead

Wed 1^st: Manufacturing PMI, lending to individuals

Tags: week in review, public sector finances, gdp, business investment, consumer confidence

Week in Review - 1st April, 2011

Felicity Burch April 01, 2011 11:33

↑ GDP, 2010q4, final revision	National Statistics revised their estimates for GDP in the fourth quarter of 2010, with data once again showing a 0.5% contraction. Output grew by 1.1% in manufacturing, but services and construction output fell.

↓ Balance of Payments	The current account deficit in 2010q4 was £10.5bn, equivalent to -2.9% of GDP. This compares with a deficit of £8.7bon (-2.4% of GDP) in the 2010q3. The worsening in the Balance of Payments was due to higher deficits on current transfers and on trade in goods, combined with a lower surplus for trade in services.

↔ Business Investment	National Statistics’ revised Business investment estimate for 2010q4 terms showed no growth when compared with the previous quarter. The provisional estimate had shown a fall of 2.5%. Manufacturing investment increased 4.1% over the quarter.

↓ Lending to individuals	Total net lending to individuals rose £2.0 billion in February. Within the total, lending secured on dwellings rose £1.2 billion while consumer credit rose by £0.8 billion.

↔ GfK/NOP Consumer Confidence	GfK NOP’s Consumer Confidence Index remains at -28. There were small increases on the indicators relating to the general economic situation but households felt that their personal financial situations over the last 12 months, and the climate for major purchases, had worsened.

↓ Manufacturing PMI	The manufacturing PMI fell back a little to 57.1, following last month’s record high of 61.5. This is still well above the series average of 51.3. Continued input price pressures meant that output prices rose at a record rate.

The week ahead

Wed 6^th: Index of Production

Thu 7^th: MPC rate decision

Fri 8^th: Producer price index

Tags: gdp, trade, investment, lending, consumer confidence, pmi

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