However 93 per cent of Nationwide's research took place before 14 September 2007 and therefore does not cover the initial Northern Rock period, a turn of events which is highly likely to impact on consumer sentiment.
Early indications suggest that this has definitely dented consumers' confidence in the current economic situation which could feed into overall confidence in the coming weeks.
The Present Situation Index (how consumers feel about the current economic and employment situation) rose six points to 102, suggesting consumers are upbeat about the current situation, whilst the Expectations Index (how consumers feel about the economic and employment situation in six months time) was also more upbeat, bouncing back after the dip in August.
The Spending Index (consumers' willingness to spend) also recovered in September almost completely reversing the seven point fall seen in August. The Spending Index now lies at 85, which is 15 points lower than a year ago but above its three month average of 83.
Fionnuala Earley, Nationwide's chief economist, said: "The pick up in confidence has been largely driven by confidence in the labour market. When people feel secure in their employment it is perhaps not surprising that their general confidence levels are more robust.
"The effect of the recent financial turmoil on overall economic, and hence labour market conditions, is therefore crucial to consumers' confidence going forward. Early indications suggest that consumers may have been more affected by the initial run on Northern Rock, but any lasting effects will be dominated by the impact of recent events on the real economy."
Positive sentiment about the current and future employment situation drives confidence
Sentiment about employment has been the main driver of the increase in confidence. Six in ten (60 per cent) of consumers are positive about the number of jobs currently available - up from half (51 per cent) in August. At the same time, the number of people who are negative about the number of jobs currently available has fallen from 25 per cent in August to 19 per cent in September - its lowest level since May 2005.
House price expectations moderate further
Peoples' expectations of house price growth moderated in September with consumers expecting house prices to increase 3.2 per cent over the coming six months - down from 3.8 per cent in August. Consumers' house price predictions continue to be in line with Nationwide's expectations of cooling house price growth during the rest of 2007.
