Consumers in the U.K. grew in May by the second largest amount on about seven years of records due to warm weather and the royal wedding, as well as a steep decline in unemployment, according to The Daily Telegraph. On Wednesday, the Nationwide Building Society reported that its monthly index of sentiment increased by 11 points to 55 in May, which is the sharpest increase since the data began in 2004 except for a 13-point increase in 2005. The chief economist of Nationwide, Robert Gardner, said, “It is still too early to say whether consumer confidence is in a sustained recovery,” and warned that “large domestic energy price hikes are likely to dampen consumer mood.”
The report pointed to the easing of the initial shock at the increase of the value-added tax in January, as well as warm weather and bank holidays for the gain. Nonetheless, the weak housing market and uncertain outlook for the labor market were also cited as the reason for low historical level for the index. Meanwhile, the Office for National Statistics reported on Wednesday that unemployment in the U.K. dropped to 88,000 in the quarter to reach 2.43 million, which is the largest quarterly drop in 11 years. However, new claims for jobseeker’s allowance surged up at the fastest rate in nearly two years during May, suggesting that the next round of unemployment data could be discouraging.
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