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30 September 2011

Consumer confidence up? Sorry, it’s not

And here's why . . .

By David Blanchflower

Many newspapers are carrying the story that the GFK NOP consumer confidence improved between August and September, although apparently not significantly so. It seems that UK consumers became more optimistic about the economic outlook and spending; GFK NOP apparently reported that their index of sentiment gained 1 point from August to minus 30. Sorry, it didn’t.

This presents data watchers like this correspondent with a puzzle, because, on the same day, the EU Commission reported the results of the same survey. (Note that the GFK conducts the survey for the EU, which pays for it.) And the answers are completely different.

This is where the puzzle really starts, because on its website yesterday, the commission argued that the survey of consumer confidence, using the same data actually fell in September, to its lowest level since April. You can take a look here and even download the data as an Excel file across all the EU countries here.

 

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A decline does seem rather more likely than a rise, given that answers to seven questions show that confidence worsened between August and September. So surely it’s going to be pretty hard to get the survey to improve?

The EU calculates its index as (Q2+Q4-Q7+Q11)/4. Note, of course, that a higher number to Question 7 is bad. So consumer confidence fell between August and September from -20 to -22. It looks pretty hard to get a positive from 12 numbers when seven of them worsen and two show no change.

Also the overall index that the EU publishes, which is a combination of business and consumer confidence, worsened sharply to 89.5, down from 92.9, which is its lowest level since September 2009.

Up or down? Which is it? GFK and the EU had better sort this one out. It makes little sense to produce estimates that go in different directions from the same bloody survey. It looks very much to me that consumer confidence worsened in September, not improved. Somebody at GFK has a bit of explaining to do!