UK consumer confidence sees modest recovery in Sept - Nationwide

UK consumer confidence made a modest recovery in September after slumping to all time lows the previous month, according to a survey from Nationwide, the UK's biggest building society. The headline index rose by 6 points in September taking it up to 89, but stayed well below its two year average of 98. In August the index dropped 11 points after the Bank of England lifted borrowing costs unexpectedly. While all four sub-indices making up the headline index improved in September, suggesting that the slump seen in August was a general response to the bad news seen that month which included the surprise rate change. Only one of the four indices bounced back above pre-interest rate hike levels, however. The 'present situation index', reflecting people's feelings about the economy and employment now, picked up for the first time since March 2006 suggesting that consumers are not worried about the impact of the rate rise on economic performance or jobs. Future expectations stayed gloomy although slightly higher than in August while predictions for house prices fell back in September for the second consecutive month. "Consumer confidence remains low and, despite improving, has not recovered fully since the slump reported last month. The economic picture continues to look unsettled. While petrol prices have fallen and there has been some good news from car manufacturers, utility bills are still on the rise. With such mixed messages in the economy and inflation still above target, the Monetary Policy Committee will have to decide whether to raise rates sooner rather than later," said Stuart Bernau, Nationwide's executive director. The central bank decides on rates on Thursday. No change is predicted but the benchmark repo rate is seen rising to 5.00 pct from 4.25 pct.