Methodology
The Consumer Confidence survey is conducted for The Nationwide by TNS, and was started in May 2004. 1,000 adults are interviewed each month, with the sample structured to be nationally representative of all adults in term of age, sex and socio-economic group. Data is available monthly. The questions asked to compute the indexes are based on those asked by the Conference Board, tailored for UK conditions.
The Index is based on responses to 5 questions included in the survey:
- respondents' appraisal of current economic conditions
- respondents' expectations regarding economic conditions six months hence
- respondents' appraisal of the current employment conditions
- respondents' expectations regarding employment conditions six months hence
- respondents' expectations regarding their total family income six months hence
For each of the 5 questions, there are three response options: POSITIVE, NEGATIVE and NEUTRAL. For each of the five questions the POSITIVE figure is divided by the sum of the POSITIVE and NEGATIVE to yield a proportion, which we call the "RELATIVE" value. For each question, the RELATIVE for May 2004 is then used as a benchmark to yield the INDEX value for that question. The Indexes are then averaged together as follows: Consumer Confidence Index: Average of all 5 Indexes; Present Situation Index: Average of indexes for questions 1 and 3; Expectations Index: Average of Indexes for questions 2, 4, and 5.
In June 2008, the Nationwide Consumer Confidence Index (NCCI) was issued using seasonally adjusted data. As with Nationwide's house price index, the Consumer Confidence Index is influenced by seasonal considerations e.g. confidence tends to be higher in the spring months whereas the spending index is likely to be lower in December as consumers see it is a bad time to buy household goods.
As the NCCI has been running since May 2004, we are able to identify these patterns and adjust the indices to account for them, so enabling the underlying changes and trends to be more readily discerned. The technique used to make the seasonal adjustment is known as the X-12 approach, which is widely used for this purpose and is the same technique as we use for house prices.
The seasonal adjustment is applied to the calculation of the Indices. The actual responses given in the survey are not adjusted. This enables us to still see exactly what the public is saying at any one time.