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Just in time for the holidays, consumer confidence jumps

Analysts see a "more giving mood" in the most recent Consumer Confidence Index.

NEW YORK - The outlook for the holiday shopping season brightened Tuesday with news that consumer confidence soared both nationally and in Florida in November in response to a drop in gasoline prices and a pickup in the job market.

The surge in the Conference Board's Consumer Confidence Index raised hopes that Americans will be shopping enthusiastically by the end of the holidays despite this past weekend's mixed start to the season.

Separate reports Tuesday of record home sales and a jump in durable goods orders provided more signs of an improving economy that's likely to boost shoppers' spirits.

"It looks like consumers will be in a more giving mood," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. But he added, "I don't think they will spend with abandon. There are still some tight financial problems for many people. We probably will see active shopping for bargains."

The Conference Board said its Consumer Confidence Index rose to 98.9 this month, the highest level since August, when the reading was 105.5. The November figure surpassed analysts' forecasts for a reading of 90, and it was also up from 85.2 in October. The results reversed a two-month decline.

Falling gas prices likewise spurred a rebound in Florida's consumer confidence index, University of Florida economists said Tuesday.

Overall, the index rose 4 points to 84. The biggest gain was a 10 percent increase in perception of buying conditions, which rose to 98. Perceptions of short-term business conditions and personal finances compared with a year ago also rose. However, perceptions of long-term business conditions was unchanged at 76.

The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

Chris McCarty, director of the survey research center at UF's Bureau of Economic and Business Research, said he was somewhat surprised by the latest numbers, which he attributed to the recent relief at the gas pump.

Still, McCarty held some of his optimism in check. He noted that shoppers' buying plans could be held back by rising interest rates, which lead to higher refinancing and home equity rates.

Meanwhile, the Commerce Department said sales of new single-family homes shot up by 13 percent last month, the biggest one-month gain in more than 12 years. The department also reported a 3.4 percent increase in orders for big-ticket manufactured goods in October.

The sharp rebound in confidence helped lift the Dow Jones industrial average almost 70 points early in the session, but the stock market ended lower, with the Dow falling 2.56, or 0.02 percent, to close at 10,888.16, as investors worried that a strengthening economy would lead to the tightening of interest rates.

Merchants do face big challenges for the holiday season. Although gasoline prices have fallen, they are still higher than a year ago, and home heating costs are expected to force consumers to budget carefully.

The official start to the season was mixed, as discounters and electronic retailers fared the best but some apparel stores were disappointed with their weekend results. A clearer picture should come Thursday, when major retailers report their November sales figures.

The International Council of Shopping Centers said Tuesday that 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. Longer shopping hours Friday helped retailers bring in more sales, said Michael Niemira, chief economist at the trade group.

ShopperTrak RCT Corp., which monitors sales at 45,000 retail outlets, reported that sales from Friday through Sunday rose 0.4 percent from the same period a year ago.

The rebound in consumer sentiment does provide some encouragement for the rest of the holiday season. One component of the Conference Board 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 Tuesday include responses from at least 2,500 households.

[Last modified November 30, 2005, 02:15:38]