Consumer confidence bounces
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Tue, 26 Aug 2008 17:03:23 GMT |
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By Burton FriersonNEW YORK (Reuters) - Consumer confidence recovered more than expected in August as worries over inflation eased, while financial markets combed through a slew of housing data for reasons to hope the worst is over for the moribund sector.Sales of newly constructed U.S. single-family homes in July were lower than economists expected, but they rose from a June pace that was the slowest in nearly 17 years, a government report showed.Another report said U.S. home prices in metropolitan areas fell a record annual 15.9 percent in June. Still, the monthly rate of decline slowed from May, which suggested the decimated housing sector may be stabilizing, according to the S&P/Case Shiller report.The Conference Board said its index measuring consumers' mood jumped to 56.9 this month from July's 51.9, reaching the highest level since May, while a decline in inflation expectations should please Federal Reserve officials worried about an unwelcome rise in price pressures this year.The data by no means suggested the stagnant U.S. economy was vaulting to recovery, though some analysts said it showed signs of stabilization that could herald a slow turn for the better if it is maintained."Confidence is still quite depressed, but it's a glimmer of hope from the lows we saw in June," said Dana Saporta, economist at Dresdner Kleinwort Securities LLC in New York."I attribute the increase to the drop in gasoline prices, which offset a deteriorating labor market."Stocks rose after the consumer confidence data and the dollar extended its gains against other currencies. U.S. government bonds, which benefit more from weak economic conditions, added to their earlier losses.The improvement in consumer sentiment came during a month when oil prices retreated further from July's record highs but consumers' evaluation of their present situation and the job market deteriorated further.The index of "jobs hard-to-get" rose to 32.0 in August from a revised 30.2 in July, pushing the gauge to its highest since October 2003."Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year," Lynn Franco, director of the Conference Board Consumer Research Center, was quoted as saying in the report.The Conference Board, an industry group, said its gauge of inflation expectations fell to 6.7 percent -- its lowest since 6.1 percent in March -- from July's revised 7.5 percent.It hit a record high of 7.7 percent in May and June and was originally reported at 7.6 percent for July.(Additional reporting by Patrick Rucker and Richard Leong, Editing by Chizu Nomiyama) (c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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