Consumer confidence on the rise

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Nationwide said its consumer confidence index rose by 8% last month, lifting it from a record low of 51 to 55. The increase came despite people feeling increasingly pessimistic about the current state of the economy and employment prospects, with the present situation index falling by 10% to hit a new record low of 35.

The group said people's outlook was buoyed by the action taken by the Government and Bank of England to boost the financial markets, with confidence jumping by 23% following the Government's announcement on its bail out plan for the banking sector.

But despite this, the reality of the present situation appears to be hitting home, with 75% of people now saying they think the current economic situation is bad, while 41% think there are few jobs available at the moment.

Consumers are slightly more upbeat about the future, with 38% of consumers thinking the economic situation will be worse in six month's time, down from 53% in September, while the proportion who think it will be better nearly doubled to 27% in October, compared with 14% the previous month.

However, people remain pessimistic about employment prospects, with 56% expecting there to be fewer jobs available in six months' time, up from 48% in September.

Fionnuala Earley, Nationwide's chief economist, said: "The actions taken by the Government and the Bank of England to support financial markets do seem to have buoyed consumers' confidence and could be responsible for the increased confidence in the future economic situation.

"However, with the economy heading into recession, there will be bumpy times ahead for the UK consumer and it is likely to be some time before confidence returns to the level of a year ago. Rapid cuts in interest rates are however on the horizon and this may support a recovery in confidence going forward."

There was a slight increase in the number of people who thought it was a good time to buy household goods during the month, rising from 26% in September to 29%, although Nationwide said this maybe due to discounting by retailers.

But there was also a rise in the proportion of consumers who thought it was a bad time to make a major purchase, such as a house or car, with this rising to 66% from 64%.