LONDON (Reuters) - British consumer morale has risen to its highest level in just over two years this month, boosted by increasing optimism about the economy and a greater willingness among households to splash out on big purchases.
Market research company GfK said on Friday that its monthly consumer confidence index rose to -21 in June from -22 in May. That was its highest level since May 2011 and matched expectations in a Reuters poll.
The data adds to signs from industry surveys that Britain’s still-weak economy is gaining steam.
The Bank of England forecasts 0.5 percent growth in the current quarter, up from a 0.3 percent expansion in the first three months of the year.
June’s rise in the GfK index follows a five-point jump in May, and takes it well above its average level for the past year of -26.
“A one-point rise is not in itself important, but what matters more is that it is another marker in what now appears to be a clear upward trend,” said Nick Moon, managing director of social research at GfK.
The figures contrast with official data on Thursday that showed consumers’ real disposable income fell at its fastest pace since 1987 in the first three months of the year.
“What makes this apparent good cheer somewhat surprising ... is that the improvement comes at a time when there has been a flurry of recent reports showing that people are not only getting worse off, but they are likely to continue to do so,” said GfK’s Moon.
June’s improvement in the GfK index was largely driven by consumers’ greater willingness to spend on expensive items, which Moon attributed to special offers from retailers.
But this alone was not enough to account for the steady rise in morale over the past 12 months, he said.
“The overall trend in confidence over the last year is clearly upwards and not driven purely by special offers. So the paradox is that while we are getting worse and worse off, we are feeling more positive.”
The survey was conducted from May 31 to June 16 and was carried out by GfK on behalf of the European Commission.
Reporting by David Milliken; Editing by Hugh Lawson