Consumer Confidence Posts Decline in Survey

U.S. consumer confidence fell in October, sagging under the weight of hurricanes, high gasoline prices and uncertainty over jobs, although the dip in sentiment did not stop Americans from buying houses last month, data showed Tuesday.

The Conference Board said its index of consumer sentiment fell in October to 85 from an upwardly revised September reading of 87.5. A Reuters poll of economists had on average forecast a rise in October to 88.1.

“We had expected a rebound. Gasoline prices are down a lot, so that is good news, but they are still very high and that may be what is weighing on people’s minds at this point,” said Kurt Karl, head of economic research at Swiss Re in New York.

The employment outlook also was a worry. The survey’s measure of the difficulty in finding employment edged up to 25.3 in October, its highest reading since December 2004, from 25 in September.

Confidence had already fallen sharply in September after damage to energy production and refining facilities from hurricanes Katrina and Rita forced energy prices higher.

However, despite the effect of higher fuel costs on their wallets, people continued to buy homes in September.

Sales of existing homes were unchanged last month at a 7.28-million unit pace, with strong post-Katrina sales in the South helping offset weaker activity elsewhere, the National Assn. of Realtors said.

August sales of previously owned homes were downwardly revised to a 7.28-million unit pace. Analysts had expected overall September sales to decline to a 7.20-million unit pace from the originally reported 7.29-million pace in August.

Existing home sales would have been lower in September without the strong purchase activity reported for areas around the hurricane-hit zone, the Realtors’ chief economist said.

For example, while home sales dropped 85% in New Orleans, Baton Rouge, La., reported a 150% increase, the group said.

Two surveys released Tuesday provided a mixed view of the latest weekly U.S. chain store results.

Chain store retail sales fell 0.2% in the week ended Saturday, contrasted with a 0.4% increase the previous week, the International Council of Shopping Centers and UBS said in a joint report.

However, compared with the same week a year ago, sales were up 3.6% -- the best showing since early September, after a 3.3% rise the preceding week, the council and UBS said.

Redbook Research, an independent company, said U.S. chain store sales rose 1% in the third week of October from the same period in September. Redbook said sales at major retailers rose 3.6% on a year-over-year basis for the week ended Saturday.