US consumer confidence edges higher
Posted: 24 November 2009 2357 hrs

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WASHINGTON: US consumer confidence rose slightly in November after two months of declines but remained in the doldrums ahead of the year-end holiday shopping season, the Conference Board said on Tuesday.

The private research firm said its consumer confidence index rose to a seasonally-adjusted 49.5 from an upwardly revised 48.7 in October. The October reading initially was reported at 47.7.

The November figure was better than the 47.5 expected by most analysts.

"The moderate improvement in the short-term outlook was the result of a decrease in the percent of consumers expecting business and labour market conditions to worsen, as opposed to an increase in the percent of consumers expecting conditions to improve," Lynn Franco, Conference Board research director, said in a statement.

"Income expectations remain very pessimistic and consumers are entering the holiday season in a very frugal mood."

The cut-off date of the survey of 5,000 households was November 17.

Consumers' view of current conditions was virtually unchanged from last month's 26-year low: the "present situation" sub-index was 21.0 in November compared with 21.1 in October.

Those claiming business conditions were "bad" fell to 45.7 percent from 46.7 percent, while those claiming conditions were "good" rose to 8.1 percent from 7.8 percent.

Consumers' assessment of the labour market deteriorated moderately. Those claiming jobs were "hard to get" increased to 49.8 percent from 49.4 percent, while those seeing "plentiful" jobs decreased to 3.2 percent from 3.5 percent.

The official unemployment rate rose to a fresh 26-year high in October of 10.2 percent and most economists and officials expect joblessness to remain elevated as the economy emerges from the worst downturn since the Great Depression.

Consumers' outlook for the next six months improved slightly in November, pushing the "expectations" sub-index up to 68.5 from 67.0 in October, the Conference Board said.

The percentage of consumers expecting business conditions to improve slipped to 20.0 percent from 20.8 percent in October, but those expecting conditions to worsen fell to 15.1 percent from 18.2 percent.

Consumers also were slightly less pessimistic abut the job market.

Those anticipating more jobs in the market fell to 15.2 percent from 16.8 percent, but those expecting fewer jobs decreased to 23.1 percent from 26.1 percent.

Consumers' income expectations grew gloomier, with the percentage anticipating an increase falling to 10.0 percent from 10.7 percent.

Consumer confidence "remains mired at a very low level, suggesting consumers are not convinced the recession is over," said Scott Hoyt of Moody's Economy.com.

Hoyt said the biggest concern was the continued decline in consumers' assessment of current labour market conditions to new cyclical lows.

"This is consistent with the lack of hiring evident in other labour market indicators but suggests consumers are still very fearful about their ability to get and hold a job, a clear threat to the spending outlook," he said.

The report came as the government said the economy grew more slowly than initially estimated in the third quarter after a year of contraction.

The Commerce Department said gross domestic product expanded at a 2.8 percent annual rate, instead of the 3.5 percent originally estimated last month.

The downward GDP revision was in part due to consumer spending - the main driver of economic activity - which increased 2.9 percent in the third quarter, half a percentage point lower than the initial estimate. - AFP/de