UK consumer confidence unexpectedly rose to an 18 month high this month, rising way ahead of economists’ consensus which was that the reading would be flat.
The GfK sentiment index rose to -22 from -30 in October, the strongest reading since May 2011 and the seventh largest monthly rise since the survey was started in 1974.
All five measures within the index rose with consumers’ view on the general economic situation over the next 12 months rising the sharpest, up from -44 to -61.
‘One possible explanation for the surprise increase could be that consumers, arguably naively, feel the current situation can’t get any worse,' said Investec’s Lee McDarby.
Retailers will take heart from the survey with the personal financial situation over the next 12 months measure rising from -13 to -7 and the climate for major purchases metric jumping from -33 to -26 month-on month.
‘The direction things head in the New year will be crucical in determining whether this is a short-term spike or the start of a long-term improvement in people’s spending habits,’ said Nick Moon, managing director of social research at GfK. ‘When we saw a significant improvement like this May 2011 the surge ebbed away over the following months as the country returned to recession. Hopefully this spike is built on firmer foundations.’