Confidence over economy stages rally

Consumer confidence rose for the first time in four months during December as people felt slightly less pessimistic about the future of the economy and the jobs market.

The Nationwide Consumer Confidence Index stood at 53 at the end of December, up from just 45 in November, but still 24 points lower than it started the year.

There was an improvement across all three measures of confidence in the month, but the main gains were seen on expectations and spending indexes, with people's confidence in the present situation edging ahead by just three points to 24.

The expectations index jumped by 12 points in the month, but the improvement was largely driven by people feeling less pessimistic, rather than more optimistic, about future economic and jobs situation.

The group recorded a 6 per cent fall in both the proportion of people who thought the economy would be worse in six months' time and those who thought there would be few jobs available in six months' time, while the number of people who thought the situation would be better remained broadly unchanged.

The spending index jumped by 10 points in the month, with 43 per cent saying they thought it was a good time to buy household goods. But Nationwide pointed out that this was likely to reflect the fact that VAT was increasing in January, and warned there could be a reversal in people's confidence about spending early this year.

It added that the despite the increase across all the measures of confidence, the three indexes still remained well below their long-run averages.