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EDITIONS
Friday, 15 November, 2002, 16:20 GMT
Cold comfort for US economy
US shoppers
Consumers confidence grows but might not be spending
US economic data has shown an unexpected jump in consumer confidence, but that was tempered by higher inflation and retail inventories and a sharp fall in industrial output.

Consumer spending accounts for two-thirds of the US economy, but the data indicated there could be weak growth and rising inflation.

Consumer sentiment rose in early November from a nine-year low, after the job and share markets stabilised and half-point interest rate cut by the central bank, the Federal Reserve said.

US stock markets rose briefly on the news but then fell, as downgrades of Intel and General Electric and a poor forecast by Dell added to the gloom.

The University of Michigan's preliminary November consumer sentiment index rose to 85.0 from 80.6 in October, ending five months of falls.

Analysts had forecast a rise to 82.3.

But the confidence might not be translated into spending.

The Commerce Department reported that retailers' stockpiles of unsold goods had increased by 0.5% in September, the biggest rise since November 2000.

Manufacturing trouble

Wholesale prices, a key measure of inflation, shot up by 1.1% in October, the biggest leap in nearly two years, due to more expensive fuel, vehicles and food.

The jump in the Producer Price Index (PPI) - the price of goods before they reach retailers - follows a 0.1% rise in September and after being unchanged in August, the Labor Department said.

Analysts had forecast a 0.2% fall.

Industrial output showed its biggest fall in more than a year in October, the Federal Reserve said, fuelling fears about the state of the country's manufacturing sector.

The Fed said October's larger-than-expected 0.8% decline was the largest since a 1.1% drop in September 2001.

Analysts had expected output to dip by 0.3% after a 0.2% fall in September.

The manufacturing sector, which bore the brunt of US recession, had shown signs of recovery.

At 1547 GMT, the Dow Jones share index had fallen by 44 points to 8497.8 and the tech-based Nasdaq was down 24 points, or 1.7%, to 1387.5.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

07 Nov 02 | Business
31 Oct 02 | Business
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