U.S. Consumer Confidence Index Unexpectedly Rose in December

U.S. Consumer Confidence Index Unexpectedly Rose in December


Dec. 27 (Bloomberg) -- Consumer confidence in the U.S. unexpectedly rose in December, led by a gain in optimism about the future even as perceptions of the current situation deteriorated.

The Conference Board's index of confidence increased to 88.6, the first gain in five months, from a revised 87.8 the prior month, the New York-based group said today. The index averaged 105.9 last year.

The figures may ease concern that consumer spending, which accounts for more than two-thirds of the economy, will cool more than forecast and derail the expansion, economists said. Gains in jobs and wages are cushioning the blow from high fuel bills, lower home values, and restrictions on borrowing.

``Spending is holding up much better than the confidence surveys would suggest,'' Lynn Reaser, chief economist at the Investment Strategy Group of Bank of America Corp. in Boston, said before the report.

Consumer confidence was forecast to drop to 86.5, from an originally reported reading of 87.3 for November, according to the median estimate in a Bloomberg News survey of 58 economists. Projections ranged from 82 to 90.

Earlier today, Labor Department figures showed initial claims for jobless benefits unexpectedly rose last week and total benefit rolls reached a two-year high, reflecting a weakening U.S. labor market.

Business investment in machinery and communications gear softened last month, suggesting the housing slump may be spreading to other parts of the economy, economists said following a Commerce Department report.

Compared with other sentiment gauges, the Conference Board's index tends to be more influenced by attitudes about the state of the labor market, economists said. A report last week showed the Reuters/University of Michigan consumer sentiment index fell to the lowest in more than two years in December.

The Conference Board's measure of present conditions dropped to 108.3 from 115.7 the prior month. The gauge of expectations for the next six months increased to 75.5 from 69.1.

BLOOMBERG