Consumer confidence still higher than normal despite slight dip

CONSUMER confidence dipped slightly this month but remains at an unusually high level. Consumers have become slightly gloomier about the economic situation but they are still upbeat about the attractiveness of making major purchases, writes Diane Coyle.

The confidence index from the monthly survey carried out for the European Commission - a reasonably close guide to future growth in consumer spending - edged lower than January's level and is now some way below its midsummer peak. However, it stayed well above the long-term average, with the component indicating willingness to buy big-ticket items remaining close to its recent peak.

Separately, a comparison of the whole gamut of monthly business surveys published yesterday by Merrill Lynch suggested that activity in the economy is probably stronger than official figures suggest.

For the final quarter of last year the official figures showed manufacturing output declining and growth in GDP slowing noticeably. However, business surveys all showed an increase in manufacturing production.

Ian Stewart, UK economist at Merrill Lynch, said there was a clear risk of upward revisions for the latter part of 1997.