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Confidence surveys tell two stories.

Conflicting evidence about the confidence of British consumers came yesterday from two surveys, both completed before financial markets were hit by the WorldCom fraud.

A sharp fall from buoyant findings in May was reported by the British Retail Consortium's UK Retail Confidence Indicator.

At the same time, research company Martin Hamblin GfK, said its measure of consumer confidence this month remained unchanged from May, though expectations for the coming year were a little more hesitant.

The BRC's indicator, compiled from measures of retail sales and profits and the confidence of consumers, fell sharply between May and June to its second lowest monthly level since it was first compiled at the beginning of last year.

The component tracking consumer confidence dropped by nine per cent during the month, broadly in line with the 8.5 per cent drop in retail sales.

Though shopkeepers' profits showed no change, investor's confidence edged 1.2 per cent higher. 'The slowdown in sales is not surprising given that May, 2001, saw the start of an exceptionally strong cycle of growth in retail sales that has been of vital benefit to the whole economy,' said the BRC director general Bill Moyes.

'Growth in consumer spending is showing signs of slowing, but it is still positive. It is to early to judge whether this will be a sustained slowdown.

'However, consumer confidence will not be helped by all the speculation surrounding interest rates.

'The Bank of England needs to be wary of unnecessarily jeopardising retail growth in an attempt to take the steam out of the housing market.' The downward shift in the confidence indicators during the month has driven it into what the BRC considers to be an area of 'moderate confidence' from the 'high' zone in May.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jun 28, 2002
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