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Wednesday, August 31, 2011

Consumer confidence lowest since April

Confidence among consumers fell to its lowest level in four months in August, a survey showed on Wednesday, a sign they will keep a tight rein on spending, and hampering a fragile economic recovery.

The GfK NOP consumer confidence index fell for the third month in a row to -31 from -30 in July. That was better than expectations for a drop to -33 but was the lowest since April.

"With an increasing number of indicators suggesting the economy is either stagnating or returning to recession, the continuing loss of consumer confidence is a major worry for the government," said GfK Managing Director Nick Moon.

Confidence was dented by a deteriorating outlook for the economy. The component gauging peoples' outlook for the general economic situation in the next 12 months fell to -31 from -27.

However, the outlook for personal finances improved slightly to -11 from -12, and the climate for major purchases was unchanged at -31.

"While there has been a 4-point drop in consumers' general view of the economic situation over the next 12 months, there has been a small improvement in how they view their own financial situations, indicating people are starting to adapt to the austere economic climate," said Moon.

The economy grew by just 0.2 percent in the second quarter, taking annual growth to 0.7 percent, official data showed on Friday. Prospects look unlikely to improve with consumers reluctant to spend and the world economic outlook worsening.

Retail sales fell at their fastest pace in over a year in August, a CBI survey showed last week. The Co-Operative Group, Britain's biggest mutual retailer, said the environment for consumers was the toughest in over 40 years, with spending on food -- not normally affected by boom or bust -- falling.

The overall GfK index was 13 points lower than in August last year while the personal finances index was 12 points down on the same time a year ago.

The survey was based on a sample of 2,000 people and conducted from Aug 5 to 14 by GfK NOP on behalf of the European Commission.

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