US consumer confidence at 5-month high as recovery builds
CONFIDENCE among US consumers rose in November to the highest level in five months and a gauge of business activity unexpectedly climbed, signaling the recovery is taking hold heading into 2011.
The Conference Board's sentiment index increased to 54.1, exceeding the median forecast in a Bloomberg News survey, figures from the New York-based research group showed yesterday. The Institute for Supply Management-Chicago Inc said its business gauge advanced to the highest since April.
Gains in spending that are giving retailers like Wal-Mart Stores Inc a boost during the holiday-shopping season are more likely to continue into next year as households sense job and income prospects are improving. The reports helped shares trim earlier losses as an accelerating US economy offset concerns the European debt crisis will deepen.
"The economy has weathered the soft patch and is regaining some lost momentum," said Ward McCarthy, chief financial economist at Jefferies & Co Inc in New York. "Consumers are being fairly jolly as far as the early Christmas season is concerned." The Standard & Poor's 500 Index fell 0.7pc to 1,179 in New York yesterday. The gauge had been down as much as 1.1pc before the confidence and purchasing managers' indexes were released. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.76pc from 2.82pc late yesterday.
Higher than forecast
Economists forecast the confidence gauge would improve to 53, according to the median of 78 projections in a Bloomberg survey. Estimates ranged from 50 to 60. The index averaged 96.8 during the last economic expansion that ended in December 2007.
The Conference Board revised the October index down to 49.9 from a previously reported 50.2. Another report yesterday showed housing remained the American economy's weak link. The S&P/Case-Shiller index of home values in 20 cities climbed 0.6pc in September from the same month in 2009, the smallest gain since January, the last time prices declined year over year. The gauge fell 0.8pc from the prior month after adjusting for seasonal variations, the biggest drop since April 2009.
Prices are "going to be flat for a while", said Karl Case, retired professor at Wellesley College and a co-founder of the index.