August 28, 2014 / 11:09 PM / 5 years ago

Consumer confidence rises more than expected in August - GfK

LONDON (Reuters) - British consumer morale strengthened more than expected in August, matching June’s nine-year high, as Britons became more confident about the economy and their financial prospects, a survey showed on Friday.

Customers shop at a Primark store on Oxford Street in London June 20, 2014. REUTERS/Luke MacGregor

Polling company GfK said its monthly consumer confidence index rose to +1 in August from -2 in July, beating forecasts for a smaller increase to -1 in a Reuters poll.

The survey suggested consumer spending will remain one of the biggest drivers of Britain’s swift economic recovery. Its major purchases index rose to its highest level since August 2007 - around the start of the financial crisis.

Nick Moon, managing director of social research at GfK, said it looked like consumer confidence might be entering a new period of stability.

“There is no guarantee how long this stable position will last - a rush of good or bad economic news could set off a marked rise or fall, but things could stay like this for a while,” he said, pointing to previous periods of stability.

All five of the measures GfK uses to gauge consumer confidence increased this month.

A separate survey on Friday bolstered evidence that another source of growth for Britain’s economy - the housing market - is starting to cool down.

Data company Hometrack said house prices grew just 0.1 percent for a second successive month in August, with London underperforming relative to the rest of England and Wales.

Only 11 percent of London post codes registered rising house prices, compared with 87 percent in February.

“Talk of a housing bubble and warnings from the Bank of England have impacted sentiment, while tougher affordability checks for mortgages and rumblings around interest rate rises is starting to make buyers think twice,” said Richard Donnell,¬†director of research at Hometrack.

A Reuters poll of economists forecast the Bank of England is expected to raise interest rates in the first quarter of next year, likely beating the U.S. Federal Reserve to a first rate hike from record low levels.

Mortgage lender Nationwide will release its latest house price data at 0600 GMT, which is also expected to show house prices grew 0.1 percent month-on-month during August.

* GfK’s survey was conducted on behalf of the European Commission between Aug. 1 and Aug. 17.

Reporting by Andy Bruce; Editing by Susan Fenton

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