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Friday, 13 December, 2002, 17:07 GMT
US shoppers in confident mood
Santa's grotto
Christmas sales are vital for the economy
American consumers are feeling more confident in the US economy, an influential survey has found.

People are proving more optimistic than economists had thought, raising hopes that shoppers will spend strongly in the run up to Christmas.

The University of Michigan's survey findings are good news for an economy that relies heavily on consumer spending for growth.

However, falling factory gate prices in November suggest that many US firms are worried that demand for their products remains weak.

Producer prices suffered their biggest fall for six months in November, down 0.4%, according to data from the US Labor Department.

Growth fears hit dollar

The mixed picture of the world's biggest economy, came as gloom about the US economic outlook propelled the European single currency to a three-year high against the dollar.

US President George W Bush's decision to replace his Treasury Secretary earlier this week was thought to have been prompted by concerns about the economy, as well as a desire for clearer policy presentation.

Producer prices in November were pushed down by steep falls in the prices of vehicles, sports goods, telecoms equipment and, more positively, heating oil and gasoline.

The price of sports goods dropped by a record 3.1% - breaking a 10 year winning streak.

Auto prices suffered their steepest monthly fall in just over a year, down 3.6%.

They last came close to such a big fall in October 2001, when the US economy was reeling from the shock of the attack on the World Trade Centre.

Oil price rises curbed

Energy prices dropped 1.8%, contrasting with a 4.2% rise in October, when oil prices rose on fears of conflict in the Middle East.

However, US firms increased their stockpiles of goods in November by 0.2%, separate figures from the Commerce Department showed.

Stockpiles had been run down so economists are inclined to see the build up as a sign of optimism about future demand.

Consumer sentiment jumped nearly three points on the University of Michigan's index, to 87.0 points from 84.2 a month earlier.

Economists were expecting gains, but on a more modest scale, with a consensus forecast of 85.

The uncertain mood surrounding the US, and world, economy, sent US stock markets lower at the opening, though markets showed little response to the data.

The tech-heavy Nasdaq was nearly 2% lower, and the broader Dow Jones index 1% lower by late morning in New York.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

07 Nov 02 | Business
06 Dec 02 | Business
03 Dec 02 | Business
27 Nov 02 | Business
27 Nov 02 | Business
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