Friday, November 27, 2009

US consumer confidence edges up but remains subdued

US consumer confidence edged higher in November after a big drop in October, as fewer Americans felt the economic situation was likely to worsen.

The closely-watched Consumer Confidence Index from the Conference Board rose to 49.5 from a revised 48.7 in October.

But in a downbeat report, the board said income expectations were "very pessimistic" and consumers were in "a very frugal mood".

The figures cast doubt on how strong Christmas spending will be this year.

Consumer spending accounts for about 70% of overall economic activity in the US, so weak spending in the run-up to Christmas could have serious implications for the US economy.

A reading of 90 on the Confidence Index is the minimum to indicate a healthy economy.

'Strong bounce'

The "moderate improvement in the short-term outlook" was a result of fewer consumers expecting conditions to worsen, as opposed to more consumers expecting conditions to improve, said Lynn Franco at the board.

However, the number of people claiming that jobs are "hard to get" increased slightly.

Figures released earlier this month showed that the unemployment rate in the US rose to 10.2% in October, its highest rate since April 1983.

"Until the jobs market turns around, it's hard to see a particularly strong bounce in consumer sentiment," said Vassili Serebriakov at Wells Fargo.

The Conference Board figures were overshadowed by the latest GDP figures for the US economy between July and September, which were revised down to show growth of 2.8%, against the original estimate of 3.5%.

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