Consumer confidence is at a low ebb because of market uncertainty, pressure on earnings and recessionary fears.
In June 2008, the Nielsen/British Retail Consortium (BRC) consumer confidence index fell to new lows from 91, its 2007 level, to 79. With consumers shrouded by job security worries - 60 percent of people polled thought their job prospects were unfavourable, compared with 50 percent the previous year - plus concerns over personal finance and reports of negative equity in the housing market, it is unsurprising confidence is low.
And low consumer confidence means tougher market conditions for retailers, who find it harder to attract trade from the cash-strapped. Indeed, shops have seen conditions on the high street decline steadily since early 2007, with those selling non-essential goods suffering the most.
However, there are signs of recovery for retailers, after UK retail sales posted a surprise bounce in May, rising 1.9 percent on the previous year, and trumping analyst predictions of a 0.8 percent decline. Better sales in the clothes and food sectors were largely attributed to improved weather, so will a good English summer lead to further rallies for retailers, or will weak economic fundamentals such as the housing market continue to hold back consumer disposable income?
Take a position on a sector
With IG Index, it is possible to take a position on a whole sector, such as Retail, if you think it is going to rise or fall. You can spread bet on a sector, allowing you to take an industry-wide view without tying your risk or reward to one particular stock. We offer markets on a wide range of FTSE 350 sectors, gaining you exposure to a basket of related stocks with a single position.
By spread betting on a sector you pay no commission, just our competitive dealing spread.
For a full list of the Sectors you can trade on through IG Index, check our Dealing Handbook.
Updated: 13/06/08
The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.