Consumer confidence at highest level for two years

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New data will today reveal encouraging signs of recovery in the labour market and consumer sentiment, with the latest Nationwide Consumer Confidence survey and the Report on Jobs from the Recruitment and Employment Confederation and KPMG both showing positive trends.

Confirming official labour market data that show a continuing improvement, the Report on Jobs shows that in February permanent placements increased at their fastest pace since the credit crunch began in July 2007 – an acceleration of an already positive trend. Temporary and contract staff billings also increased, although the latest rise was the slowest in three months.

Overall, demand for staff among the 400 recruitment and employment consultancies surveyed continued to rise in February, extending the current phase of growth to five months.

Kevin Green, chief executive of the Recruitment and Employment Confederation, said: "The UK jobs market is continuing to improve. High-end sectors such as IT are showing particularly strong growth and we are also seeing significant increases in demand for admin and back-office support."

But he warned: "Looking ahead, there are indications that recruitment in the public sector could drop off fast. Rather than responding with random job cuts, the public sector needs to embrace radical reform."

The improvement seems to be helping to brighten the consumer outlook. A Nationwide survey puts confidence at its highest level for two years. Martin Gahbauer, Nationwide's chief economist, said: "A strong influencing factor behind this uplift is likely to be the news that the UK has come out of its longest recession on record.

"By comparison, it would seem that consumers are perhaps feeling the pinch in their spending power, and we may now be seeing the effects of the withdrawal of government incentives such as the stamp duty holiday and lower VAT.

"While confidence is likely to remain fragile for some months to come, the early signs do look positive."