The UK consumer confidence index (CCI) reached 53 in March – a nine-month high and a year-on-year rise of 7 points – according to new data released by Nationwide Building Society in partnership with the market research firm TNS-RI.
The main CCI remains 23 points below its long-run average of 76.
Nationwide compiles three other indices: the present-situation index, which reflects sentiment about the current economic and employment situation; the expectations index, which reflects sentiment about the economy, labour market and household income over the next six months; and the spending index, which gauges sentiment about spending on household goods and major purchases.
The present-situation index rose by 6 points to 24 in March. The proportion of consumers who believe that the current economic situation is bad declined by 6 percentage points to 67 per cent. The number of those who think that there are not many or few jobs available declined by 5 percentage points to 66 per cent.
The expectations index rose by 13 points to 73. There was also a 7-percentage-point rise in the proportion of people who think the economic situation will be better than today in six months time: 19 per cent are now optimistic. But the number of those who believe their household income will be higher in six months’ time remained flat at 14 per cent.
The spending index grew by 8 percentage points to 86 per cent.
The percentage of consumers who believe now is a good time to make a major purchase grew to 26 per cent, while the proportion who believe that it's a good time to purchase household goods remained flat at 31 per cent.
The research was carried out between 20 February and 25 March with 1,000 people.
Robert Gardner, chief economist at Nationwide, said:
Much of the survey‐based data has painted a more upbeat picture of the UK economy than official data in recent months – March’s consumer confidence index continues that trend . . .
The consumer confidence index has been fairly volatile from month to month but since reaching an all-time low in September last year, the trend has generally been towards increased confidence. It may be that the general decline in inflation from the recent highs of 5.2 per cent last September to 3.5 per cent in March has helped to support spending power and therefore lift consumers’ spirits over the past six months.
Despite the results, Gardner warns that "with the economy expected to gather pace only slowly, the improvement in confidence may prove short‐lived":
The apparent improvement in sentiment over the past six months should be kept in perspective. The main confidence index remains more than 20 points below its long‐run average, suggesting that households are still cautious.