Consumer confidence edged up slightly in November but was still close to a two-year low and the outlook remains gloomy, a survey by GfK NOP showed on Wednesday.
Consumers have been reining in spending in the face of high inflation, rising unemployment and a fragile economy and the survey showed them to be more pessimistic about the economic outlook for the next 12 months than they were in October.
GfK said its consumer confidence index rose to -31 in November, from -32 in October which was its lowest level since the economy was in the depths of recession in 2009.
Given the current crisis over the euro zone, and the pessimism in the media about the likelihood of the British economy sliding back into recession next year, the 1 point increase in the index this month is a minor variation and doesn't indicate a significant change, said Nick Moon, managing director of GfK NOP Social Research.
While it does reverse the decline of last month, what matters is the long-term trend, and at the moment that still looks very gloomy.
The confidence index was 10 points lower than a year ago. Consumers, however, were more positive this month on making major purchases than they were a month ago.
The survey's sub-index measuring the climate for major purchases rose 5 points from October to -27, but was 10 points lower than a year ago.
The one bright sign, which will certainly be welcomed on the high street, is the increase in the proportion of British consumers that think now is a good time for a major purchase, said Moon.
However, even this 5-point gain is doing little more than overturn the 4-point loss on the same measure last month, and the index for making a major purchase remains heavily negative.
The sub-index on expectations for the economic situation over the next 12 months dipped 2 points from October to -33 and was 11 points lower than November last year.
The Organisation for Economic Cooperation and Development warned this week that the UK economy will slip into a modest recession early next year while finance minister George Osborne announced help for small businesses and investment in infrastructure projects among other measures to try and revive economic growth.
Exports are being hit by the debt crisis in the euro zone, Britain's biggest trading partner, and the UK economy grew just 0.5 percent in the third quarter from the previous three months.
British retailers have been slashing prices to lure consumers.
Sales at John Lewis The GfK survey was conducted between November 4 and 13. (Reporting by Susan Fenton)
The GfK survey was conducted between November 4 and 13.
(Reporting by Susan Fenton)