Consumers in US gain confidence on more jobs, rising stocks

Consumers in the United States gained confidence in November for the first time in three months, raising the odds that an improving job market and increasing wages and stock prices will lift spending.

The Thomson Reuters/University of Michigan preliminary sentiment index rose to 69.3, in line with the median forecast of economists surveyed by Bloomberg News and the highest level since June, from 67.7 in October. The measure averaged 88.9 in the five years to December 2007, when the last recession began.

Retailers from JC Penney Co to Walmart Stores Inc are still planning on using discounts to entice customers during the holiday season, typically merchants’ biggest sales and hiring period, as unemployment holds near 10 per cent. The report also signals the end of political campaigning following the election may help dispel pessimism over the economic outlook.

“It’s a very good sign for spending in the months ahead,” said Russell Price, a senior economist at Ameriprise Financial Inc in Detroit. “We are seeing a little bit better numbers on the job front,” he said. Additionally, “the uncertainty we had approaching the elections is over and the improvement in the stock market suggests to a lot of Americans that maybe the economy is slowly improving.”

Economists forecast the measure would increase to 69, according to the median of 66 projections in the Bloomberg survey. Estimates ranged from 66 to 75.

Stocks dropped on concern China will try to rein in economic growth and inflation by raising interest rates, slowing the global recovery. The Standard & Poor’s 500 Index fell 0.8 per cent to 1,203.40 at 11.27 am in New York.

The S&P 500 rose 3.7 per cent in October after an 8.8 per cent gain the prior month, the best back-to-back performance in more than a year.