Finance news

U.K. consumer confidence jumped the most in almost two years last month as stocks rallied and the property-market slump showed signs of easing, Nationwide Building Society said.

An index of sentiment rose 8 points from March to 50, the Swindon, England-based mortgage lender said in an e-mailed statement today. In a separate report, the National Institute of Economic and Social Research predicted growth will resume in the fourth quarter as the economy emerges from its worst annual contraction since the Great Depression.

The Bank of England will need to assess whether to keep printing money to aid the economy tomorrow as evidence emerges that the recession is moderating. U.K. stocks had their biggest monthly gain since 2003 in April, Nationwide’s housing index showed prices fell less than economists forecast and mortgage approvals rose to a 10-month high in March.

News on stocks and property “may have contributed to a marked upturn in consumer confidence during April,” Martin Gahbauer, senior economist at Nationwide, said in the statement. “It is likely that the U.K. economy will continue to contract for some time yet, so it is too early to say whether this trend in confidence will continue.”

A measure of future expectations rose to 70 from 57, Nationwide said. There were also one-point increases for the index showing Britons’ willingness to buy household goods and make major purchases, and the gauge of sentiment on shoppers’ present situations.

Labor Market

Permanent staff appointments by job consultants fell at the slowest pace in seven months in April, KPMG and the Recruitment and Employment Federation said in a separate report today. The gauge of permanent placements rose to 37.3 from 33.5 in March.

Loans for house purchase rose to 39,230 in March as banks loosened credit restrictions, while Nationwide’s house price index fell 0 1000 cash advance.4 percent in April, a third of the median economist forecast in a Bloomberg News survey. The FTSE 100 Index rose 8.1 percent last month, the biggest gain in six years.

The economic slump will persist as house prices fall 16 percent in 2009, Niesr said. The institute, whose clients include the Treasury and the Bank of England, said gross domestic product will contract 4.3 percent this year, the most since 1931, compared with a 2.7 percent decline predicted in February. The historical comparison excludes World War II data.

Pound Weakness

Economic growth will resume in the fourth quarter as global trade rebounds and exporters benefit from the weakness of the pound, Niesr said. The U.K. currency has fallen about 16 percent in the past year on a trade-weighted basis.

“We’re expecting the worst to be behind us, with the first quarter to be the peak in the U.K.’s contraction,” Simon Kirby, an economist at Niesr, told reporters yesterday. The economy shrank 1.9 percent in the first three months of this year, the biggest drop since 1979.

The Bank of England will keep the key interest rate at a record low of 0.5 percent tomorrow, the median forecast of 61 economists in a Bloomberg News survey shows. Policy makers will also vote on whether to continue spending 75 billion pounds ($113 billion) of newly printed money in U.K. debt markets to ease credit strains and counter the risk of deflation.

The British Retail Consortium said in a separate report today that prices in U.K. shops rose 1.4 percent in April from a year earlier, down from a 2 percent increase the previous month. From March, the cost of goods fell 0.5 percent, the first drop in four months.

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