Consumer confidence – as measured by its Consumer Confidence Index - has risen for the second consecutive month, increasing by six points to 80 in February, says the Nationwide Building Society.
This increase means that the Index now stands at its highest level since January 2008, and almost double the level recorded during the same period last year, when the index was 41.
The Nationwide says that its Present Situation and Expectations indices also experienced some upward momentum at the start of 2010, with the indices rising to 27 and 115 points respectively. However, confidence in spending continued to fall away during the month and dropped four points to 93 in February.
Expectations about house prices rose slightly in February, with consumers expecting the value of their home to increase by 1.5 per cent over the next six months, compared to 1.1 per cent in January.
At 115, the Expectations Index reached its highest level during February since records began, and is now more than double the level it was this time last year (56).
Consumer expectations towards the future economic and employment situation both improved during the month, with 39 per cent believing the economic situation will be better in six months' time (compared to 36 per cent in January), and less than half (43 per cent) believing there will be not many or few jobs available - the first time this figure has dropped below 50 per cent since September 2008.
There is similar positive sentiment towards future household income with the number of people who think it will be the same or higher in six months' time increasing by two percentage points to 88 per cent.
The Present Situation Index climbed to its highest level since December 2008 and this was largely due to improved sentiment around the current employment situation.
A quarter of people now believe there to be many or some jobs available - up three percentage points from January - while the proportion who believe there to be not many or few jobs available fell by six percentage points to 61 per cent during the month.
"Following a small dip at the end of 2009, consumers have started this year in a more optimistic fashion with February's figures showing a surge in confidence in both the present and future situation said Martin Gahbauer, Nationwide's chief economist.
“A strong influencing factor behind this uplift is likely to be the news that the UK has come out of its longest recession on record following six consecutive quarters of contraction beginning in 2008.
“By comparison, it would seem that consumers are perhaps feeling the pinch in their spending power as confidence declines in this area, and we may now be seeing the effects of the withdrawal of government driven incentives, such as the stamp duty holiday and lower VAT, impact on the index.
“Consumer confidence is crucial to a strong and sustainable recovery and, while confidence is likely to remain fragile for some months to come, the early signs do look positive."
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