07/12/2005

'Strong rise’ in UK consumer confidence

Consumer confidence is on the rise in the UK ahead of Christmas, the Nationwide building society has reported.

The Nationwide reported that its Consumer Confidence Index had risen by 9 points in November to 101 – the largest monthly change recorded. This followed three successive monthly falls, which saw the index drop to its lowest ever level, in October.

However, the Nationwide said that this surge reflected a return to more comfortable levels, rather than a suggestion that confidence was soaring.

The building society said that fears for the economy had lessened, with employment remaining strong, stable earnings growth, stable interest rates and fears over petrol prices waning.

Talk of gas price rises seemed to have little impact on confidence, the Nationwide said, while the upturn in house prices may also have helped to boost confidence slightly.

The Nationwide said that the increase suggested that retailers could look forward to better High Street conditions.

Stuart Bernau, Nationwide’s executive director, said: "After three consecutive monthly falls in confidence, consumers appear to be feeling some festive cheer as we approach Christmas. The main index recovered from the previous month’s low, back to the longer- term average.

"It appears that recent negative sentiment, caused by recent higher petrol prices, fears over house prices and other factors, has dissipated. More upbeat sentiment may stem from more positive news on a number of fronts and may also reflect greater optimism in the run up to Christmas.

“In addition to feeling more positive about the present, there has been an upsurge in confidence about the future indicating that consumers feel that better times lie ahead for jobs, the economy and their incomes."

The Nationwide also said that consumers also seemed more optimistic about the housing market, with its Consumers’ House Price forecast rising from 3.1% from 2.9% in October – up from 1.2% in January.

The Nationwide said that consumers’ greater confidence is likely to reflect a belief that a soft landing has been achieved.

(KMcA/SP)

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