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Sunday 30th of May 2010
May 25, 2010    

US consumer confidence up in May

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by Kay Murchie

US consumer confidence rose in may, despite fears about the debt crisis in the euro zone.

The closely-monitored Consumer Confidence Index from the Conference Board rose for the third consecutive month to 63.3 in May, up from 57.7 the previous month.

However, despite the rise, the index still remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Since the index commenced in 1967, the average reading has been 95.6.

However, today’s reading did little to cheer the markets after European and Asian markets all slumped today as ongoing fears about the euro zone debt crisis continue to unnerve investors.

The Dow Jones industrial average fell below the crucial 10,000 points mark today, while earlier, London’s FTSE fell below the crucial 5,000 mark to 4,939.6 points – its lowest level for eight months.

Earlier in the day, Asian markets also saw sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.

Hong Kong’s Hang Seng index closed down 3.47% – its biggest percentage drop in almost six months, while Japan’s Nikkei lost 3.1% to close at its lowest level since November last year.

However, commenting on today’s US figures, Lynn Franco, director of the Conference Board Consumer Research Centre said: “The improvement has been fuelled primarily by growing optimism about business and labour market conditions. Income expectations, however, remain downbeat.”

In related news, the National Association of Realtors (NAR) yesterday revealed a rise in sales of previously owned homes in the US for the month of April, boosted by the expiration of a Government tax credit, which ended last month.

The industry body said sales surged 7.6% in April (a five-month high) to an annual rate of 5.77 million units, up from a revised 5.36 million in March.

Furthermore, the figure is up 23% on April 2009 levels.

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