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Consumer confidence improves in December

December 28, 2005

By Richard Leong

NEW YORK (Reuters) – U.S. consumer confidence improved in
December to the highest level since August, before Hurricane
Katrina slammed into the U.S. Gulf and sent gasoline to record
highs, a survey showed on Wednesday.

The Conference Board said its index of consumer sentiment
rose in December to 103.6 from a November reading of 98.3,
which had been downwardly revised from 98.9.

Economists polled by Reuters on average had forecast the
index likely rose to 101.8.

“The resiliency of the economy, recent declines in prices
at the pump and job growth have consumers feeling more
confident at year-end than they felt at the start of 2005,”
said Lynn Franco, director of the Conference Board Consumer
Research Center.

The business research group’s present situation index rose
to 121.5 from a downwardly revised 113.2, while the
expectations component increased to 91.6 from a downwardly
revised 88.4 in November.

U.S. retail gasoline prices fell for the first time in
three weeks, to $2.20 a gallon last week, off 1.4 cents from
the prior week but up 41 cents from a year earlier, the U.S.
Energy Information Administration said on Tuesday.

Consumers grew more optimistic about the jobs market at
year-end, according to the Conference Board.

The survey’s measure of the difficulty in finding jobs fell
to 22.2 in December from an upwardly revised 23.6 in November,
making this the lowest reading this year.

Sentiment indexes have traditionally been seen as a gauge
of U.S. consumer spending, which accounts for roughly
two-thirds of overall economic activity. However, analysts note
that consumer behavior does not always follow the findings of
confidence surveys.

Early tallies suggested a solid if not spectacular year-end
shopping season for U.S. retailers.

Seasonally adjusted holiday sales, excluding autos and
gasoline, were running 5.2 percent ahead of a year ago,
according to SpendingPulse, a data service of MasterCard
Advisors, an arm of MasterCard International.

The SpendingPulse data spanned from November 25 to December
17.

Consumers picked up their purchases in the week leading to
Christmas and the start of Hanukkah. A pair of reports by
Redbook Research USREDY=ECI and the International Council of
Shopping Centers with UBS Securities USUBSY=ECI showed U.S.
chain store sales last week rose 4.5 percent and 3.9 percent,
respectively, from the comparable 2004 week.

In the December Conference Board survey, consumers said
they were more likely to buy a car and major appliances in the
next six months than they did in November, but less likely to
buy a home.


Source: reuters



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