Consumer Attitude Index Up
U.S. consumer sentiment improved in early December, suggesting an upbeat mood heading into the holiday shopping season, data showed Friday.
Confidence jumped for a second straight month as the gloom of Hurricane Katrina and record-high gasoline prices in late summer faded into memory. The job market picked up steam as well. The University of Michigan’s closely watched consumer sentiment measure rose to 88.7 in early December from November’s final 81.6. Analysts had forecast the index at 85.5.
“In the last month we got a good payrolls report, so that probably helped,” said Elisabeth Denison, economist at Dresdner Kleinwort Wasserstein in New York. U.S. payroll growth reached a four-month high of 215,000 in November.
Both segments of the Michigan index -- current conditions and expectations -- rose strongly to retrace much of the ground lost in August through October.
Also, the Economic Cycle Research Institute’s leading index of the U.S. economy rose at an annualized growth rate of 1.8%, up from 1.5% a week ago.
Rising confidence could bode well for the holiday shopping season, the year’s busiest time for retailers.
Analysts often stress the limited correlation between consumer confidence and consumer spending. However, like chicken soup, brighter sentiment might not help but it won’t hurt.
“Christmas spending this season is likely to outperform most analysts middling expectations,” said Brian Fabbri, chief economist, North America, at BNP Paribas.
Sources said the one-year inflation component of the subscription-only Michigan survey fell to 3.1% from 3.3% last month, while the five- and 10-year inflation outlook held steady at 3%.
Federal Reserve officials have been concerned recently that rising inflation expectations will become ingrained in the consumer psyche, affecting everything from decisions on when to make major purchases to salary negotiations.
No spending delays are evident so far. The Commerce Department on Friday said merchant wholesalers’ inventories rose by a smaller-than-expected 0.2% in October while sales rose by 1.2%. The inventory-to-sales ratio fell to a record low.
