According to the survey, job security has hit a two-year high, which has helped to maintain consumer confidence despite the credit squeeze affecting much of the financial sector. The balance of respondents feeling more secure in their jobs rose to two per cent, a level not seen since July 2005. The number regarding general UK job prospects as better rather than worse than a year ago is still negative (-17 per cent), but is the highest result since December 2005.

The survey showed that consumers also believe interest rates have peaked thanks to the Bank of England’s decision to hold rates at 5.75 per cent in September. The number of respondents predicting that interest rates would be higher rather than lower in a year’s time fell by two per cent to 67 per cent – the lowest level since July 2006. However, 75 per cent of consumers still said interest rates would rise.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, commented, ‘The recipe for consumer confidence is a secure job and ability to pay the bills. Despite the credit market turmoil, we have seen increasing optimism in both these areas in September.’

But Williams’s outlook for future months was not as optimistic. ‘The outlook for the rest of the year and 2008, however, is less encouraging,’ he said. ‘With signs of weakness in the housing market beginning to materialise, it is likely we may see confidence beginning to deteriorate in coming months.’