Consumer confidence rises eight points in April

The Nationwide Consumer Confidence Index rose by eight points to 50 in April, the largest single monthly rise for nearly two years.

All the sub-indices recorded a rise this month, with the Expectations Index increasing by 13 points to 70, a rise on this scale has not been seen since May 2007. The Present Situation Index, which had been falling since June 2008, recorded a one point increase to 21. The Spending Index moved only marginally during the month and continued its upward trend from 97 to 98.

The improvement in confidence this month, particularly in the Expectations Index, may reflect reports that, whilst the UK economy remains in recession, the rate of economic decline is beginning to ease. Only marginal changes were seen in the Present Situation Index, suggesting that consumers remain concerned about the current economic environment and the labour market. It is too early to say whether this month's results mark the start of an upturn in confidence.

Martin Gahbauer, Nationwide's senior economist, said: "In recent weeks, we have seen a strong rebound in global equity markets and some tentative signs of improvement in housing market indicators, both of which may have contributed to the marked upturn in consumer confidence during April. A number of the world's largest banks also announced a return to profits and this may signal the start of a thaw in the money markets and an improvement in lending conditions. However, it is likely that the UK economy will continue to contract for some time yet, so it is too early to say whether this trend in confidence will continue into the next month as consumers continue to digest further industry data and the 2009 Budget."

Consumers feel brighter about the future...

Perhaps marked by the clocks going forward, some spring sunshine or a trickle of less gloomy news, consumers appear to be more upbeat about the economic situation in six months' time. Just over a quarter (26%) of those questioned now believe that the economic situation will be better in six months' time, a figure not see since the bank bail-out scheme was announced in October last year, when it was 27%. The percentage of those believing the situation will be worse in six months' time dropped back from 41% in March to 32% in April.

...but concerns remain about the current economic and employment situation

While people may be looking more positively towards the future, sentiment about the current economic and employment situation remains fairly gloomy. 80% of consumers felt that the current economic situation was bad, although this is better than last month when 83% felt this way. Confidence about the employment situation also remains low, with over two thirds (68%) of those questioned believing that there are not many jobs available, compared to 66% in April. This is not surprising given further reports of more anticipated job losses across a number of sectors.

Little change to views on household income and spending

Consumers' views about household income in six months' time remained relatively stable during April, although there was a three point shift from the percentage believing their income would be lower across to thinking it would be the same. The percentage of those believing now is a good time to make a major purchase continued on its upward trend from 38% in March to 42% in April.

Expectations about house price falls over the next six months improved further in April. Consumers now expect prices to fall by 2% over the next six months, compared with 3% in March.