RTTNews - British consumer confidence rose to a six-month high in May on expectations that the economy may recover from the recession, a closely watched survey revealed Wednesday.
The National Building Society said its consumer confidence indicator climbed to 53 in May from 51 in April, the highest since November 2008. Meanwhile, economists had forecast a reading of 52.
The consumer confidence survey also revealed that households are upbeat about the economic conditions in the next six months, with the expectations index rising to 76 from previous month's 71. Further, a gauge of consumers' appetite to make major purchases rose 1 point to 101. However, the current economic situation index dropped to 17 from 21.
Consumers appear to be much more confident about the future, said Martin Gahbauer, chief economist at Nationwide. However, As we continue to see contrasting news about the state of the economy, it is likely that confidence will remain fragile, he added.
While some reports suggest that the pace of slowdown is easing, some sectors are still contracting, making any recovery sluggish. The British economy contracted 1.9% in the first quarter of this year, the largest decline since the third quarter of 1979.
The worst recession is expected to push the number of unemployed as firms fired more and more employees to survive the crisis. Earlier this week, a former member of the Bank of England's Monetary Policy Committee, David Blanchflower said in an interview to BBC radio that jobless claims in the U.K. might increase around 100,000 a month for the next year or so.
However, surveys carried out by various organizations indicated that the worst of the recession is over and conditions are stabilizing. On June 2, the Confederation of British Industry said its latest access to finance survey indicates that the rate of deterioration in credit conditions slowed further over the past three months and conditions are expected to stabilize in the months ahead.
The BoE is widely expected to leave its key interest at a record low of 0.5% on Thursday. Monetary easing and pumping new cash into the economy are expected pave the way for a recovery.
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