Outlook upbeat for jobs in 2005

Consumer confidence index hits 5-month high

`Hiring is poised to accelerate'

Buying expected to keep economy growing

December 29, 2004|By BLOOMBERG NEWS

NEW YORK - U.S. consumer confidence jumped to a five-month high last month, beating the most optimistic forecast, as more Americans said jobs are plentiful and the outlook for the economy brightened.

The Conference Board's index rose to 102.3 from a revised 92.6 in November, stronger than was first reported. Expectations for the economy over the next six months climbed to the highest level since July.

"We expect the consumer to roll into 2005 on a high note, as hiring is poised to accelerate and income gains will pick up as well," said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Conn. He had forecast a reading of 98 for the index this month.

The Conference Board report yesterday suggested that spending by U.S. shoppers will contribute to the economic expansion into the first half of next year. More consumers in the survey said they expect their incomes to rise in the coming six months, and a larger percentage said they expect to buy appliances, automobiles and houses.

Shoppers may have gotten a head start. Sales at retailers surged in the final days before Christmas. Amazon.com Inc., the world's largest Internet retailer, said Monday that it logged a single-day record of 2.8 million orders.

Almost one American in five in the Conference Board report said jobs are "plentiful." The 19.4 percent was the largest share since 19.7 percent in July. The proportion saying jobs are hard to get dropped to 26.4 percent from 28 percent.

The share expecting their incomes to increase over the next six months rose to 20.7 percent this month, the highest in a year, from 19.2 percent. Those expecting a decrease dropped to 8.6 percent from 10.6 percent.

Employers added 112,000 workers to their payrolls in November after 303,000 in October, the latest Labor Department data show. That's the best two months of job growth since April and May. About 175,000 were probably added this month, according to a Bloomberg survey.

The Standard & Poor's index of 500 stocks closed last week at its highest level since August 2001, and gasoline prices fell to their lowest level since April, giving people more money to spend.

Lower fuel costs helped consumers, Stanley said. The average price of a gallon of gasoline was $1.86 in the week that ended Dec. 20, down from $1.89 a week earlier and the lowest since April 26, according to statistics from the Energy Department.

The index of consumer expectations for the next six months rose to 99.9 from 90.2 in November, the biggest increase since President Bush declared an end to major combat missions in Iraq in May last year. Optimism about the current situation increased to 105.9 from 96.3.

Economists expected the New York-based research group's expectations index to rise to 94. The Conference Board surveyed 5,000 households about general economic conditions, employment prospects and spending plans.

The highest confidence reading, almost 120, was in the region consisting of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming. The biggest increases, 26 percent each, were in that region and in the Mid-Atlantic region, consisting of New Jersey, New York, and Pennsylvania.

The U.S. economy grew at a 4 percent annual rate in the third quarter, the Commerce Department said last week. For the year, economic growth is projected at 4.4 percent.

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