Consumer confidence soared in November as declining gasoline prices and an improving job market contributed to a stronger-than-expected reading.
NEW YORK — Consumer confidence soared in November as declining gasoline prices and an improving job market contributed to a stronger-than-expected reading that could bode well for the holiday shopping season.
The Conference Board said today that its Consumer Confidence Index rose to 98.9 this month from 85.2 in October. Analysts had expected a reading of 90. The better-than-expected results reversed a two-month decline.
“A decline of more than 40 cents in gasoline prices this month and the improving job outlook have combined to help restore consumers’ confidence,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
“While the index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season,” Franco said.
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Still, she warned, the holiday spending will be fueled by the bargains consumers have come to expect.
The sharp rebound in confidence prompted a modest rise in U.S. stock markets.
Investors were also reassured by two other economic reports. The Commerce Department announced a 3.4 percent increase in orders for big-ticket manufactured goods in October. The agency also announced that sales of new single-family homes shot up by 13 percent last month, the biggest one-month gain in more than 12 years.
The upbeat reports indicate that the economy is recovering from the blow wielded by the Gulf Coast hurricanes, but the nation’s merchants still face big challenges this holiday season. Although gasoline prices have fallen in recent weeks, they are still higher than a year ago, and home heating costs are expected to force consumers to budget carefully for the holidays.
While the nation’s retailers are still analyzing sales figures from last weekend, the official start of the holiday shopping season, it appeared those offering the best discounts brought in the most customers. Discounters and electronics retailers attracted more customers than many mall-based apparel stores.
The latest updates on spending last weekend today were encouraging.
The International Council of Shopping Centers reported sales at stores open at least a year, known as same-store sales, rose 5.1 percent for the week ended Saturday compared to a year ago.
ShopperTrak RCT Corp., which monitors retail sales at 45,000 outlets, reported that sales for the combined Friday, Saturday and Sunday period rose 0.4 percent from a year ago. It said that across-the-board discounting earlier in the weekend may have tempered how many dollars were generated by sales, but improved as the big bargains expired late Saturday and Sunday. With such deep discounting, stores were under pressure to sell more items to meet their sales goals.
ShopperTrak’s initial report for the combined Friday and Saturday period, announced Monday, found that sales fell 0.5 percent from the same period a year ago.
The rebound in consumer sentiment is encouraging, but whether it will help boost holiday spending remains unclear. One component of the consumer confidence report, which examines consumers’ views of the current economic situation, rose to 114.0 from 107.8. The expectations index, which measures consumers’ outlook over the next six months, surged to 88.8 from 70.1 last month.
The Conference Board index is derived from responses received through Nov. 16 to a survey mailed to 5,000 households in a consumer research panel. The figure released today include responses from at least 2,500 households.
Consumers’ assessment of present-day conditions improved in November. Those claiming business conditions are “good” increased to 25.5 percent from 23.3 percent. Those claiming conditions are “bad” decreased to 17.3 percent from 18.4 percent. Labor market conditions also appear to be improving. Consumers saying jobs are “hard to get” decreased to 23.2 percent from 25.3 percent, while those claiming jobs are “plentiful” was virtually unchanged at 20.8 percent.
Consumers’ outlook for the next six months is considerably more upbeat, although not as optimistic as earlier this year. Those expecting business conditions to worsen decreased to 11.7 percent from 18.5 percent. Those expecting business conditions to improve rose to 18.8 percent from 14.1 percent.
The outlook for the labor market is also more optimistic. Those expecting more jobs to become available in the coming months increased to 14.2 percent from 12.3 percent, while those expecting fewer jobs fell to 17.7 percent from 24.0 percent in October.