WASHINGTON – Consumer confidence (search), bolstered by falling energy prices and rising job prospects, bounced up in the past month, posting the first advance since August.
The AP-Ipsos consumer confidence index rose to 93.9 in early December, compared with a reading of 89.8 in November. It marked the first monthly gain since the index hit 104.8 in August, which had been the highest reading since January.
Consumer confidence began to sag in late summer as the economy and job growth (search) slowed significantly under the impact of rising oil prices (search). Contributing to the weakening of consumer sentiment was the fall election campaign that heightened Americans' uncertainty about the future.
But now that the election is over with a clear winner and oil prices have tumbled, dropping by more than $10 from the record high of $55 per barrel reached in October, analysts said consumer sentiment should also be on a rebound.
"This is an encouraging statistic especially at this time of year when you hope consumers will be out spending up a storm," said Richard Yamarone, chief economist for Argus Research in New York.
Economists closely watch confidence readings for clues on future consumer shopping patterns. Consumer spending accounts for two-thirds of total economic activity.
Analysts said in addition to the big drop in energy prices, consumer confidence is being helped by a recent pickup in hiring. After languishing for several months, job growth soared by 303,000 in October. While November's gain of 112,000 was less than had been expected, analysts said taken together the two months were pointing to stronger job growth in the future.
"We are not looking at a booming job market, but there is no question that the doldrums in employment are behind us," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "Generally, employment is the most important factor affecting confidence."
The increase in the index in early December reflected improvements in consumers' feelings about current conditions, their finances and their expectations for the future. The component that measures jobs was unchanged as people felt better about job security and recent job losses but were less certain about potential job losses in the future.
The index is benchmarked to a 100 reading in January 2002, when Ipsos started the index.
The December survey was based on a poll of 1,000 adults taken Dec. 6-8, with a margin of sampling error of plus or minus 3 percentage points.