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US consumer confidence hits 5-month high: Reuters/UofM

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US consumer confidence hits 5-month high: Reuters/UofM

Consumer confidence in economic activity increased faster than expected in December, a sign that households are prepared to loosen their pockets this holiday season.

A gauge of consumer sentiment, courtesy of Reuters and the University of Michigan, rose 7.4 percentage points to 82.5, a five-month high. A median estimate of economists called for an increase to 76.0, according to a Bloomberg survey. The monthly index measures consumer sentiment toward personal finances and the nation’s overall economy. It is used to gauge consumer willingness to spend money.

US consumers expressed an improved economic outlook across several key indicators; the barometer of current conditions increased nearly ten points to 97.9. Expectations about the future rose from 66.8 to 72.7. Consumers were more optimistic about employment, property values and the fiscal climate, with concerns about another budget crisis in the new-year easing.

“We have seen consumer confidence generally moving higher for upper-income households, but we also are seeing gains among most households because of the improving labour market,” said Dean Maki of Barclays Plc.

On the labour front, the past two months witnessed the highest level of job creation since February and March. US employers added 203,000 payrolls in November, following a revised estimate of 200,000 payrolls in October.
Less than 300,000 Americans filed for unemployment benefits last week, a sign fewer people are being laid off amid the holiday frenzy. With the unemployment rate falling to a five-year low, market participants are raising their bets the Federal Reserve will begin paring asset purchases in the new-year.

The retail sector relies heavily on holiday shopping. The unexpected boost in consumer confidence bodes well for American retailers, whose November sales took a hit on bargain-hunting. Retail sales unexpectedly rose 0.4 percent in October, according to the Commerce Department.

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