RTTNews - Consumer confidence in the UK improved in June, as consumers became more confident about the economic situation in the next six months, the latest survey from Nationwide showed Wednesday. Separately, a report revealed an unexpected decline in house prices.
The consumer confidence index moved up four points to 58 in June, from a revised reading of 54 in May and coming in better than economists' expectations for a reading of 55.
This increase reflects that overall, consumers feel increasingly positive, as confidence levels are now very close to those recorded this time last year, Nationwide said. Further, the report said consumers were more confident about purchasing household items.
In June, the expectations index climbed eight points to 86, while the spending index rose one point to 104. However, the present situations index dropped one point to 17.
For the first time since the launch of the Consumer Confidence Index in May 2004, more people expect the economic situation in six months time to be better than believe it will be worse, Martin Gahbauer , chief economist of Nationwide said. At the same time, a higher percentage of respondents expect the economy to remain the same in six months.
Despite the overall rise in confidence, consumers continued to be worried about the unemployment situation in the present, even as the official unemployment figure rose to a 12-year high in May and the claimant count hit 4.8%, which is the highest since July 2007.
However, expectations about house price falls over the next six months improved in June. Consumers now expect prices to fall only 0.6% over the next six months compared to a 1.2% fall in May.
Elsewhere on Wednesday, Lloyds Banking Group Plc's Halifax division released the house price figures for June. The report said house prices in the UK unexpectedly dropped 0.5% month-on-month in June, after a 2.6% increase in the preceding month. Economists were looking for a 0.3% rise.
According to Halifax, the mixed picture of monthly rises and falls so far this year contrasts sharply with the consistent succession of significant monthly declines recorded in 2008.
These figures provide evidence that the underlying pace of house price decline is easing, Martin Ellis, housing economist at Halifax said. Going forward, a continuing mixed pattern of monthly house price rises and falls are expected over the remainder of 2009, the economist added.
Meanwhile, a report released by the British Retail Consortium Wednesday showed that the shop price inflation slowed for the third consecutive month in June and was also the lowest since December last year. The shop price index rose 0.7% year-on-year in June, slower than 1.3% rise in the preceding month.
Adding to the positive readings, the National Institute of Economic and Social Research said Tuesday that the UK economy was now stagnating rather than continuing to contract at a sharp pace. Moreover, this view was also highlighted by the British Chambers of Commerce, which said the worst phase of the recession was over, though it indicated it was far too early to say a recovery was secure.
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