Rise in Consumer Confidence Affirms U.K.'s Economic Recovery

U.K.consumer confidence surged nine points in September to the highest level since January 2008 and reaffirms the U.K.'s economic recovery.

There have been only five other times that the index has jumped over nine points or more. In each case the market was always higher 12 months later (median return 24.9 percent).

In the chart below we have compared the six major advances since 1984 to the current recovery. We can see that the current rally is far stronger than previous ones and is very overbought. This is not surprising given that the decline was greater.

We believe that although it is sometimes dangerous to argue with statistics, the next 12-month advance will be more moderate (10 percent) than the confidence study suggests.

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Source: Ned Davis Research

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