May Consumer Confidence Index dips 4.2% to 71

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The CNBC-TV18 Boston Analytics Consumer Confidence Index dipped 4.2% in May from 74.1 in April. The Current Situation Confidence Index also fell 1.7% in May from 71.4 in April to 70.2 in May. The Future Expectations Confidence Index also declined 6.8% - from 77.6 in April to 72.3 in May.

The Employment Confidence Component dipped 5.1% in May and the Consumer Confidence Component dipped 8% in May. This was the lowest reading of indices since Jan 2008.

Most components of the index dipped significantly. In the CNBC-TV18 Boston Analytics Consumer Confidence Index, which was launced in January, is arrived at after interviewing 10,000 respondents across 16 cities.

Weak numbers

"It looks like the fear surrounding employment is driving a vicious feedback loop into increased savings," Sam Thomas, Director - Research, Boston Analytics, said. "Consumers appear to be very afraid of borrowing and in order to save more they are pulling back on spending plans."

Thomas also pointed out that the survey straddled the month of May before the election results fully came out, so there could be the possibility of the pre-election confusion about what government comes into power that held back spending, "though the direct questions about spending plans, I don't see how that should be affected by the elections." He added, "So the numbers are just remarkably weak, it is puzzling. However, it implies that the slowdown is not over, it is still underway."

Thomas said that the uptick that was seen in April was a bounce. "There was no change in the trend and we were encouraged to see that in April there was a slight improvement in terms of expectations. But the job side of the questions, employment job security and then connect it into savings and ease of borrowing or comfort in borrowing, all remain weak and unfortunately we are not able to reconcile why exactly this is going on, but the root of the problem is job security related issues and the consumer is just being very careful."