UK consumer optimism 'increases'

UK consumers think the economy will improve in the months ahead

UK consumers were more optimistic last month about the future than they had been for six months, according to the Nationwide Consumer Confidence index.

The index hit 53 in May, up from a reading of 51 the month before and the highest reading since November.

Despite the improved outlook for the future, consumers remained pessimistic about the current situation.

"It is likely that confidence will remain fragile," said Nationwide's chief economist Martin Gahbauer.

"While some reports suggest tentative signs of a slowing in the pace of economic decline, it is important to remember that a number of sectors are continuing to contract and any recovery is likely to be sluggish," said Mr Gahbauer.

"What is clear from our findings is that while consumers remain pessimistic about the present situation, they appear to be much more confident about the future than they were at the beginning of the year," he added.

But there is still much uncertainty around the length of the recession, with analysts predicting that the economy will contract for some time, albeit at a slower pace.

The two-point jump in Nationwide's consumer confidence index in May followed an eight-point increase the month before.

However, regarding the present situation, only 6% of respondents said they thought the economy was in good shape, while 77% thought it was not.

The UK economy shrank 1.9% in the first three months of this year, the biggest contraction in three decades.