UK Consumer Confidence Rises

31 August 2010

U.K. consumer confidence unexpectedly rose in August for the first time in six months in a sign that rebounding economic growth is cheering shoppers, a report by GfK NOP Ltd. showed.

“A further fall would have made a double-dip recession seem a very real prospect,” Nick Moon, managing director of GfK NOP Social Research, said in the statement. “The single biggest improvement has been in confidence in the economy in the next 12 months and this looks particularly encouraging on first sight,” though it “merely reverses a similarly large drop in July.”

The economy expanded 1.2 percent in the second quarter as a jump in construction and stock rebuilding by companies powered the biggest growth spurt since 2001, data on Aug. 27 showed. Bank of England Deputy Governor Charles Bean cautioned the next day that officials may need to expand emergency stimulus to support the recovery.

Mortgage Lending

U.K. banks granted 48,722 loans to buy homes in July, up from a revised 48,562 in June, the Bank of England said today. The median forecast of 19 economists in a Bloomberg News survey was for a decrease to 46,500 from an initially reported 47,600.

Other data suggest sentiment in the economy may be weakening. Home values dropped in August by the most in 16 months as the housing market endured a “modest re-pricing” that is likely to last as long as a year, Hometrack Ltd. said yesterday. The average cost of a home fell 0.3 percent from the previous month.

Source: Craig Stirling, Bloomberg