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Confidence booster

Douglas Fraser | 14:49 UK time, Wednesday, 6 May 2009

The strongest indication of the "" of economic recovery so far is the number of media mentions of the phrase soaring in the past month, as measured for the Economist magazine.

But there are more indications, hints and straws in the wind than headline writers.

On Tuesday, the Purchasing Managers' Index showed things for the construction sector are looking up - or at least they're not looking nearly so far down as they have for seven months.

Now the same PMI surveying is reporting on the service sector, and it's a similar story - not actually growing, but shrinking at its slowest pace since last August. The new business index has seen its strongest figures for 10 years, though from a dismal base.

Nationwide Building Society put out its index of consumer confidence.

Its monthly measure of people's perception of the current economic situation has been falling since last June, but the balance between good (5%) and bad (80%) has narrowed by one point.

Asked about the jobs market, 68% of people reckon there are not many jobs available, with 20% being positive.

Much more buoyant are the expectations of what to expect next. The percentage of people believing the UK economic situation will get worse over the next six months has fallen from a peak of 60% last July, down to 53% in January and the most recent figures are at 32%.

Meanwhile, those thinking the British economy will be in better shape six months from now have risen from a low point of 11% last summer to 26%.

With confidence a vital and precious commodity to any upturn, Nationwide found those thinking this is a good time to buy a house or car have risen from 14% last August to 42% now, and the 'bad time to buy' figures have fallen from a summer figure of 68% to 38%.

And further evidence of a return to the shops, from Synovate retail consultants, shows footfall in April showing its strongest growth for more than five years, perhaps because people are replacing foreign holidays with retail therapy, perhaps because of the dates Easter fell this year and last.

But of course, there are downsides. Halifax Bank of Scotland reports that UK-wide house price figures are falling at a slightly faster rate last month, with the past year's annual fall now looking like 17.7%.

The National Institute of Economic and Social Research has just announced that it reckons on a 4.3% decline in the British economy this year, much worse than the Treasury forecast of 3.5%, and worse also than other economic modellers.

That is largely fuelled by the expectation that unemployment figures have only started to rise, and that will surely impact on consumer confidence and the property market.

None of these organisations is encouraging talk of green shoots. Everyone knows there remains a bumpy ride ahead, and that much of this statistical approach to confidence is only registering a declining pace of fall.

Comments

  • Comment number 1.

    Douglas... You've been reading Labour Party PR stuff again...

    You talk about the importance of confidence. What I'm now 100% confident of is that Brown want to build a recovery on reviving house prices, financial services and credit... In other words he wants to reflate the bubble..

  • Comment number 2.

    Any suggestion of a recovery is pie in the sky,a few hopeful comments from organisations hoping to drum up trade by conning the punters into believing now is the time to buy.This is siezed upon by the Labour press as signs of recovery, aided and abetted by the Labour spin machine which is still hoping to avoid wipeout at the European elections and at the unavoidable general election. Until prices bottom out, no one will be dumb enough to spend money in a big way, especially on property which could have another fifteen percent to fall by the end of the year.

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