100-NCCI_March2011

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Unformatted text preview: www.nationwide.co.uk/consumer_confidence March 2011 Confidence picks up in March following record low Nationwide Building Society, the UK's third largest mortgage and savings provider, today releases its Consumer Confidence Index for March 2011. Confidence up over the month Consumer confidence rose by five points in March after the Index reached its lowest ever level in February Slightly more optimistic views towards the future helped to push the Index a little higher in March, but failed to reverse the significant falls seen in the preceding month Consumer assessments of their present situation remain subdued and the Present Situation Index rose by just one point to 21 in March 125 120 115 105 95 85 75 65 55 45 35 Mar 11 (44) Feb 11 (39) Mar 10 (73) Spending confidence also improves The Spending Index, which records whether consumers judge this a good time to make household or major purchases, rose to 66 points in March up 13 points from February's record low This is the first time this Index has risen since the introduction of the 20% VAT rate at the beginning of the year This could be an indication that consumers are starting to adjust to the impact of the higher VAT rate on their finances Robert Gardner, Nationwide's chief economist, said: "After a fairly dismal start to the year there was some respite in March with consumer confidence picking up from the record lows seen in February. While this is a welcome change in direction, we must remember that the Index remains at a historically low level, and the up tick in March failed to reverse the fall suffered in the previous month. When we compare the Index to its long-term average of 80 points it is clear that we will need to see a succession of increases before we can say that confidence has returned anywhere close to pre-recession levels. "With the recovery still proving sluggish, it is unlikely that we will see a significant improvement in the coming months. It is far more likely that confidence will remain subdued for several months yet until the economy gains greater momentum. "Energy price movements and interest rate expectations are likely to play a key role in shaping confidence over the coming months. Oil prices have hit new all-time highs in sterling terms in recent weeks, which will maintain the squeeze on already hard-pressed household budgets. Housing market expectations Consumers continue to show caution towards the state of the housing market They expect the value of their homes to fall by 0.9% over the next six months. This compares to a decrease of 1.1% they expected in February 2011 Mar 11 Nationwide Consumer Confidence Index - Present Situation Index - Expectations Index - Spending Index Note: seasonally adjusted 11 Feb 11 39 20 51 53 44 21 60 66 Media enquiries to: - Roy Beale, Media Relations Manager, 01793 655689, roy.beale@nationwide.co.uk - Paul Beadle, Senior Manager, Media Relations, 01793 655189, paul.beadle@nationwide.co.uk www.nationwide.co.uk/consumer_confidence "News that the Bank of England held rates at 0.5% for another month will be welcomed by many consumers who are currently benefiting from the low base rate environment. However, the Bank of England is expected to start the process of returning interest rates to more normalized levels at some point this year. This won't be bad news for everyone, however, with savers likely to benefit in a rising rate environment. The full impact of higher interest rates on confidence will depend crucially on the economic background against which they take place as well as the size and pace of any increases. March 2011 Consumer house price forecast Report month MarMar-10 AprApr-10 MayMay-10 JuneJune-10 JulyJuly-10 AugAug-10 SeptSept-10 OctOct-10 NovNov-10 DecDec-10 JanJan-11 FebFeb-11 MarMar-11 % change over next six months 0.9 1.0 1.0 0.7 0.4 -0.1 0.1 -0.9 -1.4 -0.9 -1.1 -1.1 -0.9 Economy drives March figures "The improvement in confidence was driven by a slightly more upbeat assessment of consumers' own situation and their expectation for the economy in the months ahead. Nearly 60% of consumers believe conditions will be the same or better in six months' time. Nevertheless, this is still well below the 81% of consumers who felt the same at this time last year. Pre-Budget spending sentiment up "Consumers assessed that March was a slightly better time to be buying household goods or to make a major purchase, with the Spending Index picking up for the first time in 2011. Notably, this is the first increase in spending sentiment since the introduction of the 20% VAT rate in January perhaps an indication that consumers are adjusting to the impact this is having on their own finances. "The substantial 13 point increase seen in the Spending Index in March illustrates a more optimistic mood in the run up to the Budget. However, this should be viewed in context. While a significant increase, the rise was from an all-time low and failed to fully reverse the decrease seen in February. "As the field dates for March's survey pre-date the Chancellor's Budget, it won't be until April's figures are available that we will be able to assess how confidence has responded." For a full breakdown of historical data for the Nationwide Consumer Confidence Index since May 2004 visit: www.nationwide.co.uk/consumer_confidence/data_download To view the Nationwide House Price Index, including historical figures and reports, visit: www.nationwide.co.uk/hpi www.nationwide.co.uk/hpi Media enquiries to: - Roy Beale, Media Relations Manager, 01793 655689, roy.beale@nationwide.co.uk - Paul Beadle, Senior Manager, Media Relations, 01793 655189, paul.beadle@nationwide.co.uk www.nationwide.co.uk/consumer_confidence Nationwide Consumer Confidence Index The Nationwide Consumer Confidence Index rose by five points in March from 39 to 44 (research took place from 21 February 2011 to 20 March 2011). March 2011 Chart 3 - Expectations Index 12 0 110 10 0 Chart 1 - Nationwide Consumer Confidence Index 12 0 110 10 0 90 80 70 60 50 40 30 M ay-0 5 M a y-0 8 M a y-0 9 M a y-0 4 M ay-0 7 N ov-0 5 N ov-0 8 M a y-1 0 M ay-0 6 N ov-0 6 N ov-0 9 N ov-0 4 N ov-0 7 N ov-1 0 90 80 70 60 50 M a y-0 5 M a y-0 8 M a y-0 9 M a y-0 4 M a y-0 7 N ov-0 5 N o v-0 8 M a y-1 0 M a y-1 0 M a y-0 6 Sub-Indices In addition to the main Consumer Confidence Index, Nationwide Building Society compiles three other indices: Present Situation Index, Expectations Index and Spending Index. Present Situation Index (Chart 2): reflects sentiment about the current economic and employment situation. This Index rose by one point to 21 in March. The proportion of consumers that believe the current economic situation is bad fell by five percentage points during the month to 70%. The percentage of consumers who believe there are many or some jobs available rose by one percentage point to 22% in March. Spending Index (Chart 4): reflects sentiment about spending on household goods and major purchases. The Spending Index rose by 13 points in March to 66. The percentage of consumers that believe now is a good time to make a major purchase rose by six percentage points in March to 23%. The proportion of consumers who believe now is a good time to purchase household goods increased by two percentage points during March to 23%. Chart 4 - Spending Index 115 10 5 95 85 75 65 55 45 M a y-0 5 M a y-08 M a y-09 M a y-04 M a y-0 7 N ov-05 N o v-0 8 M a y-0 6 N ov-0 6 N o v-0 9 N o v-0 4 N ov-07 N ov-1 0 Chart 2 - Present Situation Index 110 10 0 90 80 70 60 50 40 30 20 10 M a y-0 5 M a y-0 8 M a y-0 9 M a y-0 4 M a y-0 7 N ov-0 5 N ov-0 8 M ay-1 0 M ay-0 6 N ov-0 6 N ov-0 9 N ov-0 4 N ov-0 7 N ov-1 0 The Nationwide Consumer Confidence Index: The Nationwide Consumer Confidence Index (NCCI) is compiled in partnership with TNS-RI, the market research group that conducts the research for the US index. The NCCI Index was first published in May 2004. For March, the TNS-RI research for Nationwide took place from 21 February 2011 to 20 March 2011 with 1,002 people. The House Price Expectations data is based on a balance of people who believe that house prices will be higher in six months' time against those who think they will be lower in six months' time. Expectations Index (Chart 3): reflects sentiment about the economy, labour market and household income over the next six months. This index increased by nine points to 60 in March. The proportion of people who believe the economic situation will be better than today in six months' time increased by four percentage points to 18% in March. The percentage of people who believe there will be many or some jobs available in six months' time rose by one percentage point to 19%. For past reports and methodology see: www.nationwide.co.uk/consumer_confidence Media enquiries to: - Roy Beale, Media Relations Manager, 01793 655689, roy.beale@nationwide.co.uk - Paul Beadle, Senior Manager, Media Relations, 01793 655189, paul.beadle@nationwide.co.uk N o v-0 6 N o v-0 9 N o v-0 4 N ov-0 7 N o v-1 0 www.nationwide.co.uk/consumer_confidence 99 Nationwide Consumer Confidence Index (seasonally adjusted). May 2004 = 99 2004 May Nationwide Nationwide Consumer Confidence Index Present Situation Index Expectations Index Spending Index 99 99 99 101 March 2011 2010 2010 Mar 73 25 106 98 2011 Apr 77 30 108 101 May 68 24 96 103 June 65 26 91 99 July 59 27 80 98 Aug 64 28 88 102 Sept 55 23 77 89 Oct 54 27 73 95 Nov 47 22 63 82 Dec 55 25 75 91 Jan 48 24 65 71 Feb 39 20 51 53 Mar 44 21 60 66 (nonConsumer responses (non-seasonally adjusted) Present Situation: consumers' view of the current economic and employment situation UK Economic Situation - Current 45% Good 31% Neither good nor bad 20% Bad 4% Don't know UK Employment Situation Current Many/some jobs 66% available 10% Neither many nor few Not many/few jobs 20% available 5% Don't know 8% 26% 64% 2% 7% 29% 62% 2% 6% 27% 67% 1% 6% 22% 72% 1% 6% 25% 68% 1% 6% 30% 62% 1% 6% 27% 65% 1% 7% 28% 64% 1% 7% 24% 69% 1% 7% 29% 63% 1% 6% 27% 67% 1% 5% 20% 75% 0% 5% 23% 70% 1% 22% 10% 65% 3% 28% 9% 61% 4% 26% 11% 59% 3% 28% 9% 61% 3% 28% 9% 60% 3% 27% 11% 58% 3% 25% 12% 60% 2% 28% 11% 58% 3% 22% 13% 64% 2% 23% 12% 63% 3% 24% 11% 63% 2% 21% 8% 69% 2% 22% 8% 68% 2% consumers' Expectations: consumers' view of the economic and employment situation in six months' time UK Economic Situation six months' time 15% Good 33% 50% Neither good nor bad 48% 30% Bad 16% 5% Don't know 3% UK Employment Situation six months' time Many/some jobs 57% 25% available few 17% Neither many nor few 23% Not many/few jobs 21% 48% available 4% Don't know 3% Household income six months' time 26% Higher 18% 65% Same 69% 9% Lower 11% 1% Don't know 2% 29% 52% 15% 4% 30% 45% 22% 4% 27% 47% 24% 2% 23% 46% 28% 2% 26% 47% 26% 2% 22% 46% 31% 2% 23% 47% 29% 2% 19% 42% 38% 1% 21% 45% 32% 1% 17% 44% 36% 2% 14% 42% 42% 2% 18% 41% 38% 2% 28% 24% 45% 3% 29% 22% 46% 3% 23% 21% 53% 1% 24% 17% 57% 2% 23% 21% 54% 2% 20% 20% 58% 2% 27% 18% 55% 1% 19% 19% 62% 1% 20% 21% 56% 2% 22% 20% 58% 2% 18% 17% 63% 1% 19% 16% 63% 2% 17% 69% 13% 1% 14% 70% 14% 2% 15% 68% 15% 2% 14% 64% 21% 1% 12% 72% 15% 1% 17% 65% 16% 2% 14% 67% 19% 1% 13% 65% 20% 2% 15% 66% 17% 2% 13% 66% 19% 2% 13% 66% 20% 1% 14% 65% 20% 1% whether Spending: consumers' view of whether this is a good time to purchase major goods, such as a house or car, or household goods Spending confidence Major purchase e.g. house or car 28% Good time to buy 32% 30% 30% 27% Neither good nor bad 30% 34% 32% 45% Bad time to buy 36% 33% 37% 1% Don't know 3% 2% 2% 29% 29% 40% 2% 25% 34% 39% 3% 30% 31% 38% 2% 25% 31% 43% 2% 27% 31% 40% 2% 22% 31% 44% 3% 25% 28% 46% 1% 22% 25% 51% 2% 17% 28% 54% 1% 23% 25% 51% 1% Spending confidence Household goods e.g. white/brown goods 58% Good time to buy 35% 36% 38% 37% 33% Neither good nor bad 47% 51% 50% 50% 7% Bad time to buy 13% 11% 10% 11% 1% Don't know 3% 2% 2% 2% 40% 46% 11% 2% 40% 46% 12% 2% 35% 50% 12% 2% 35% 51% 13% 2% 31% 51% 16% 2% 43% 41% 15% 1% 35% 40% 22% 2% 21% 51% 26% 3% 23% 51% 22% 3% www.nationwide.co.uk/consumer_confidence Notes: March 2011 Indices are produced using a mix adjusted Nationwide Consumer Confidence Methodology which was introduced with effect from June 2008. Indices are seasonally adjusted using the US Bureau of the Census X12 method. Currently the calculations are based on a monthly data series starting from May 2004. Figures are recalculated each month which may result in revisions to historical data. All data shown as percentages in this report reflect consumer responses and are, therefore, not subject to seasonal adjustment. Nationwide Consumer Confidence Index (non-seasonally adjusted). May 2004 = 100 2004 May Nationwide Consumer Confidence Index Present Situation Index Expectations Index Spending Index 100 100 100 100 2010 2010 Mar 75 24 109 102 2011 Apr 77 28 110 105 May 69 25 98 102 June 64 26 90 99 July 57 27 77 96 Aug 61 27 84 100 Sept 56 26 76 88 Oct 58 29 78 92 Nov 47 23 63 80 Dec 53 24 73 88 Jan 47 24 63 74 Feb 39 19 53 56 Mar 46 21 62 69 Note to editors Nationwide's Consumer Confidence Index is based on a monthly survey representative of the UK population. For March, the TNS-RI research for Nationwide took place from 21 February 2011 to 20 March 2011 with 1,002 people. ...
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This note was uploaded on 02/08/2012 for the course FIN FIN4345 taught by Professor Koij during the Spring '10 term at FIU.

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