Consumer mood weaker than expected

Thursday, 30 September 2010 23:41 -     - {{hitsCtrl.values.hits}}

(Reuters) - Consumer confidence weakened more than expected in September, as people’s outlook on their own finances and the economy as a whole darkened, a survey showed on Thursday.

The GfK/NOP consumer confidence barometer fell to -20 this month from -18 in August, below forecasts for a smaller decline to -19, suggesting that last month’s improvement was a blip.

The prospect of deep government spending cuts and uncertainty over the economic recovery has weighed on consumer morale this year and the survey’s compilers said such concerns were likely to persist.

“September’s slump suggests the rise in consumer confidence in August was a false dawn, as feared,” said Nick Moon at GfK social research.

“I think we could be about to find out if the money markets are more worried about double-dip recession than they are about the size of the UK deficit.”

Signs that the global economic recovery may be faltering combined with concerns about the scale of government spending cuts have stoked worries that Britain’s fragile economy could be at risk, although growth in the second quarter was strong.

Some Bank of England policymakers see a greater likelihood that the central bank may need to do more to stimluate growth, according to minutes of their September meeting.

Monetary Policy Committee member Adam Posen suggested this week that the BoE should restart its asset-buying quantitative easing programme to prevent a Japan-style slump.

The GfK survey showed that Britons were more gloomy about the outlook for the economy over the next 12 months than they had been in August, with an index reading of -19. They were also more pessimistic about their personal finances in a year’s time.

However, the index gauging consumers’ appetite to splash out on major purchases, such as cars or big domestic appliances and furniture, improved by 5 points on the month to -15.