Slight increase in UK consumer confidence

UK consumer confidence edged up during May as people felt increasingly optimistic about the future state of the economy, research showed today.

Nationwide Building Society said its consumer confidence index rose by two points during the month, building on an eight point jump in April.

The improvement was driven by a belief among consumers that both the economic and employment situation will be better in six months' time.

Around 28% of those questioned said they expected the British economy to improve during the coming half year, the highest figure since the group began the research in 2004.

The number of people who think there will be more jobs available in six months' time also continued to increase, rising to 22%, although 57% of people still expect there to be few jobs available going forward.

However despite their growing optimism about the future, consumers continue to remain pessimistic about the current situation, with just 6% of those questioned saying they think the economy is currently in a good state, while 77% think it is bad.

Two-thirds of people also think there are currently not many jobs available, compared with 20% who think there are good employment opportunities.

Martin Gahbauer, Nationwide's chief economist, said: "The more modest change in overall consumer confidence this month is no surprise and, as we continue to see contrasting news about the state of the economy, it is likely that confidence will remain fragile.

"While some reports suggest tentative signs of a slowing in the pace of economic decline, it is important to remember that a number of sectors are continuing to contract and any recovery is likely to be sluggish.

"What is clear from our findings is that while consumers remain pessimistic about the present situation, they appear to be much more confident about the future than they were at the beginning of the year."

Around 39% of British people think now is a good time to make a major purchase, such as a house or car, down from 42% in April, although still well up on the 14% who felt this way in May last year.

A further 41% of people think now is a good time to purchase household goods, such as furniture or kitchen appliances, while 17% think it is a bad time, up from 15% in April.

People's expectations for house price falls continued to improve during the month, with consumers now expecting homes to lose 1.6% of their value during the coming six months, down from predictions of 2% falls in April.