* House prices up for second time in three months in May
* Consumer confidence holds steady
* Retailer John Lewis sees best dept store week this year
* Govt scheme boosts car sales by 35,000 since launch
By Christina Fincher and Matt Falloon
LONDON, May 29 British house prices rose for the
second time in three months in May, the consumer mood steadied
and a top retailer enjoyed its best week this year -- further
signs the economy may have begun the long road to recovery.
The government said its scheme to help the ailing car
industry was already starting to bear fruit, having boosted
sales by 35,000 since its introduction following the April
But analysts warned against getting too carried away,
arguing that the Bank of England still has its work cut out to
get a weak economy growing again before the end of the year.
The Nationwide building society said the average house price
rose 1.2 percent during May, the second rise since March when
house prices turned higher for first time since October 2007.
The annual rate of decline slowed from 15 percent to a
nine-month low of 11.3 percent.
"Today's reading, while stronger than expected, is broadly
consistent with the improving mood music in the housing market,"
said Colin Ellis, European economist at Daiwa Securities.
"However, in the last housing collapse there were several
months where prices rose, so we should not get our hopes up too
high. Any recovery is likely to be gradual and protracted,
rather than swift and sharp."
There were mixed, but encouraging, signs from a consumer
confidence survey which showed the consumer mood holding steady
in May, as an improvement in Britons' expectations for their own
finances offset rising gloom over the economy.
The GfK/NOP index, which is conducted on behalf of the
European Commission, was unchanged at -27 this month, ending
three months of consecutive gains and coming in just below the
consensus forecast of -25. [ID:nLS307819]
"This is still very low historically but is at least
standing firm in the face of continuing depressed markets," said
GfK's Rachael Joy.
The Bank of England has slashed interest rates to a record
low of 0.5 percent this year and embarked on an unprecedented
125 billion pound ($200 billion) asset-buying plan to galvanise
the economy, which shrank 1.9 percent in the first quarter,
There have been some tentative signs that conditions are
starting to improve, but the BoE has warned that a sustainable
recovery will be difficult without an increase in bank lending.
Prime Minister Gordon Brown's Labour government is banking
on an economic turnaround by the end of the year to help revive
its political fortunes, but these latest signs of stabilisation
in the economy are unlikely to outweigh the impact of rising
unemployment in the remainder of the year.
Most experts reckon the economy will shrink by at least 3.5
percent this year and a return to growth is likely to be some
time coming, especially as unemployment is expected to keep
Consumer surveys have been difficult to interpret this year
as more upbeat official sales figures have often contrasted with
other more depressed measures.
British retail bellwether John Lewis, which sells everything
from food to furnishings, said sales in its department stores
rose 2 percent in the week to May 23 compared with a year ago --
it's best performance this year.
Food sales rose 6 percent, giving a total sales increase of
"We face a sterner challenge in this and future weeks, but
this is still a very satisfying result," the company said in a
(Additional reporting by Fiona Shaikh; Editing by Richard