Year economic revival.

Ringing tills have been music to traders, with people dipping deeper into their pockets than in 1991.

And with a rallying Bermuda Exchange and a pick-up in real estate sales, hopes have risen yet further.

The good news has bolstered Government forecasts of a 1993 summer turnaround.

But business leaders and bankers yesterday spoke of a slow recovery -- rather than a big boom.

"The turnaround will not come with a flick of a switch,'' warned Mr. Michael Collier, chief general manager of the Bank of Butterfield.

Optimism has also risen as the green shoots of recovery pop up in the United States.

The US Government's main gauge of economic performance -- the Commerce Department's Index of Leading Indicators -- jumped in November, boosting recovery hopes.

The index -- designed to forecast up to nine months ahead -- signalled a modest recovery.

Finger-crossing retailers also reaped the biggest Christmas sales bonanza in four years.

Profits, moreover, will be greatly higher than in the last three years because traders did not slash prices to win sales.

But there is one blot on the economic copybook. Sales of new homes fell last month, bucking the recent trend.

Generally, however, the outlook has taken on a rosier hue.

And with increasing signs of revival, pressure has mounted on President-elect Bill Clinton to focus on cutting the deficit, rather than needlessly pumping the economy.

Bermuda's retailers yesterday also reported encouraging Christmas sales, which were on a par with last year.

But with fewer people on the Island it meant spending per capita had increased.

Mr. Bobby Rego, chairman of the sales division of the Chamber of Commerce, said he had carried out a phone-around yesterday among his members.

And the message was the same: sales had been promising, signalling a better 1993.

"The sales have been better than I hoped for. Towards the end of November we were pessimistic, but things picked up from mid-December,'' said Mr. Rego.

"People feel more secure now and they are prepared to spend a bit more.'' Mr. Rego believed in-store promotions and the Chamber's Christmas shopping festival had paid off.

Mr. Eldon Trimingham, chairman of the Bank of Bermuda and president of Trimingham Bros., was confident it would be third time lucky for Bermuda -- after two "false starts'' on an economic revival.

But he stressed the key to sustained recovery was a rise in tourist numbers.

It would be wrong to rely on a kick-started US economy to bring back the good times to Bermuda.

"We have to get visitors down here. We are not going to solve our problems unless we get our hotels into a viable shape. That is absolutely essential.'' Mr. Trimingham said recovery in Bermuda would be "slow and gradual.'' "It won't be a return to the boom of 1988 and 1989, which was very unhealthy and one of the reasons why the correction now has been so uncomfortable.'' Mrs. Susan Bawn, general manager of Gibbons Co, said the firm's sales were up on last year.

But this was because of the company's new Reid Street Underground department.

Mrs. Bawn also cautioned about comparing with 1991 -- which was down on the year before.

"Basically the effects of inflation have been felt,'' she added.

Mrs. Bawn, however, described herself as "cautiously optimistic'' about the economic future.

Mr. Donald Lines, Bank of Bermuda president, said the Bermuda Exchange's year-end rally, in which it climbed 4.24 points to a new record high, demonstrated the "increased liquidity in the economy.'' He predicted modest two percent growth in the States would be mirrored in Bermuda.

It was important, however, for the lid to be kept on costs and inflation.

Mr. Lines backed calls for Bermuda to provide a better service for visitors, with prices at an "acceptable level.'' "I think in the past there has been an attitude problem in Bermuda. We must provide the quality of service to match the price.'' Mr. Lines said small cottage colonies were likely to fare better in 1993 than major hotels.

"Generally I'm modestly optimistic,'' Mr. Lines added.

Mr. Collier said he believed the mood among consumers had brightened up considerably.

Mr. Leonard Gibbons, from Gibbons Real Estate, said economic revival was likely to be slow.

But the real estate market had "solidified,'' with an increase in activity.