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Consumer confidence at 18-month high

UK consumer confidence rose in May to hit an 18-month high, according to Nationwide.The latest headline consumer confidence index published by the building society reported a nine-point rise last month to a balance of 99 â€" the highest level recorded since November 2005.Upbeat views about the health of the country's housing and employment markets appear to be behind the increased confidence.Confidence about the availability of jobs in the future helped fuel a fifth consecutive rise in Nationwide's index of expectations, which climbed six points to 97 in May.Anticipation of future house price growth also picked up "sharply" last month, Nationwide reported.Meanwhile the consumer confidence index, based on a survey conducted between April 23rd and May 20th, rose the most in the week that prime minister Tony Blair announced the date for his resignation â€" despite interest rates increasing a quarter of a percent in the same period.The Bank of England raised the benchmark rate of interest to 5.5 per cent on May 10th, in the fourth rates rise since August.Yet while the growing cost of borrowing does not appear to have undermined consumer confidence, Nationwide warned that rate rises do seem to have led to decreased spending.The lenders' spending index was the only indices to fall in May, slipping five points last month to a level slightly below its three-month average.Commenting on the research Nationwide's chief economist Fionnuala Earley said: "Higher interest rates have not affected consumers' overall confidence, but they do seem to be having an impact on their willingness to spend."The good weather in early May might have helped put consumers in a brighter mood but, people’s spending intentions responded sharply to the latest interest rate announcement."Ms Earley added that the slowdown in spending was likely to be seen as good news by Bank of England policymakers, who are keen to curb inflation.

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