Consumer Confidence Weather Forecast – a ray of sunshine appears

A ray of sunshine flickers through the dark clouds that have hung over consumers for the best part of six months. Despite the unresolved issues surrounding the Eurozone, consumers have started 2012 in a positive mood. Headline GfK NOP confidence is at its highest since last June at -29, up 4 points on December. Often there is a January bounce in sentiment and this is the first time this has occurred since 2007. Behind the change in mood is greater optimism about the economy and in spending confidence.

Outlook

As expected, Q4 GDP saw negative growth of -0.2% with the strong possibility that Q1 2012 will follow suit. Early indicators show a mixed outlook with much revolving around job prospects. CPI inflation is falling along with inflation expectations. Consumers do appear to be adapting well to the income squeeze. The GfK measure of household finances shows a big improvement in December. Demand across many sectors will continue to be constrained as consumers defer purchases. Political and economic issues with the Eurozone will continue to spill over into the UK and create uncertainty.

Around the UK…..

Confidence increased in all regions in January. In Wales confidence has been extremely volatile in recent months – bungee jumping back to -27 from (-42) a month ago and -26 in November. Confidence also started the New Year well in Scotland, up 7 points on December and the best level since last September.

All other regions saw gains of between two and four points on the month with London continuing to be the most confident region. Compared to a year ago there is relatively little change in relative levels of confidence, continuing to be stronger in the South and Midlands, which is likely to be boosted by the London centric major events of the Queen’s Diamond Jubilee and the Olympics.

Spending and saving confidence and activity varies considerably across the UK. For planning marketing / sales campaigns increasingly regional awareness of consumers’ financial behaviour is required.

See the weather forecast map in the gallery below.

Compiled in association with the Union Direct