Analysts predicted that in the face of the greatest budget cuts in decades that consumer confidence would drop. However, in October consumers showed a slight increase according to GfK NOP index. The drop was expected to be as low as -24 which would have been a 14 month low, but instead consumer confidence rose one point to -19.
Depending on how economists interpreted the data, either confidence was remaining low with little change or confidence was more optimistic since the figures did not change by a larger margin to the bad. More leaned toward the fact that consumers were showing some optimism and that perhaps that showed a strength in the consumer that will be needed in the months ahead.
The report revealed that consumers were more confident than in the last year and more optimistic about the coming year when it came to personal finances. Confidence in the economy was not the same and instead saw a drop one point to -20.
Whether the confidence will continue is unknown. Analysts had expected a pessimistic view of personal financial positions and yet that did not reveal in the figures of the published index. Living with the actual budget cuts may get a different response as the brunt of the cuts begins to have an actual effect on consumers personally.
Nick Moon at GfK NOP Social Research said: “”As with this week’s economic growth figures, this small rise in consumer confidence for October is really only the prelude to what happens next.
“Confidence has remained reasonably consistent since June but this could change as the public comprehends the full impact of the government’s cuts.
“Should November’s figures show a significant drop, it would suggest that a double-dip recession had become more likely.”
A survey by Markit found homeowners expected house prices to continue falling. This was more in tune to what experts expected. Confidence was low but the outlook was still hopeful by homeowners.