Has UK consumer confidence bottomed?
Simon Ward
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The suggestion in a previous post that the housing market would remain resilient in early 2011 is supported by the National Association of Estate Agents' March survey, showing the average number of house-hunters registered per branch rising to an eight-month high. This builds on a solid February gain and may presage a recovery in mortgage approvals for house purchase – see first chart.
House-hunting is an early barometer of consumer spirits; the NAEA measure turned down from late 2009 ahead of a decline in the EU Commission consumer confidence indicator – second chart. The February / March pick-up suggests that an improving labour market is starting to outweigh high inflation and fiscal tightening and could herald a recovery in confidence. The stock market may be sniffing this scenario, judging from recent better performance of retail shares.
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