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February 3, 2010    

UK consumer confidence up in January

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by Kay Murchie
”UK

The latest survey from the Nationwide Building Society has revealed a rise in UK consumer confidence for the month of January.

The building society’s consumer confidence index gained three points to 73 in January - nearly double the reading of 39 in the same month a year earlier.

Meanwhile, the Nationwide’s expectations index, which gauges peoples’ sentiment about the economy, jobs and personal finances in six months time, increased to 107, from 103 in December.

Commenting on the figures, Martin Gahbauer, Nationwide’s chief economist, said: “Consumers remain cautious about the speed at which the UK will recover from what has been a longer and deeper recession than many expected.

“Positive signs from the manufacturing sector and labour market may have helped boost confidence during January, but confidence is likely to remain fragile for some months to come,” he added.

In the meantime, the Nationwide’s spending index, which measures sentiment about spending on household goods and big purchases, dipped to 96 in January from 108 in December.

The Nationwide comments: “In previous years we have typically seen spending confidence in January increase significantly. So, while consumers continue to show a willingness to spend, they do not appear to be as confident as they have been when compared to this time of year historically.”

The survey was carried out between December 21 and January 17 and questioned 1,000 consumers.

Last week, figures revealed that the UK economy grew by just 0.1% in the final quarter of 2009, suggesting that the economy had emerged from its worst recession in decades.

However, recent data this week has provided a welcome boost that the economy is recovering strongly after the Chartered Institute of Purchasing & Supply (CIPS)/Markit purchasing managers’ index (PMI) showed that UK manufacturing activity rose at its fastest rate in 15 years in January.

Furthermore, the CIPS revealed construction activity rose to 48.6 in January, up from 47.1 the previous month - it was the smallest fall in activity during the current 23-month period of contraction.

In the meantime, a separate survey conducted by the Recruitment and Employment Confederation (REC) found that the labour market is slowly starting to recover.

The permanent placement index dipped to 60.5 from December’s 62.8, but remained well above the crucial 50 mark which represents growth.

Last month, official figures revealed that the unemployment rate eased to 7.8% from 7.9%.

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