An improving job market helped keep consumer confidence close to the highest level in a year in March as a growing number of Americans said they planned to buy cars, homes and appliances.
The Conference Board’s index was 70.2 this month, in line with the median forecast in a Bloomberg News survey, down from a revised 71.6 reading in February, according to the New York- based research group. Another report today showed home prices dropped at a slower pace in January, signaling stabilization in housing that may begin to brighten moods.
The best six months of job growth since 2006, unemployment at a three-year low, and stock-market gains are giving Americans the means to withstand higher costs at the gas pump. A pickup in buying plans this month shows a sustained optimism may keep driving consumer spending, which accounts for about 70 percent of the economy.
“It’s a tug of war -- the labor market versus gasoline prices,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York. “We are close to that key psychological level of $4 a gallon. Assuming gas prices don’t shoot to the moon, consumers will keep spending.”
Stocks fell after the figures failed to encourage investors after the Standard & Poor’s 500 Index advanced to an almost four-year high. The S&P 500 (SPX) fell 0.3 percent to 1,412.52 at the close in New York.
The median forecast of economists surveyed by Bloomberg called for a decrease in the confidence index to 70. Estimates ranged from 66 to 77 after a previously reported 70.8 reading in February. The measure averaged 53.7 during the recession that ended in June 2009.
The Conference Board’s gauge of present conditions increased to 51 in March, the highest since September 2008, from 46.4 a month earlier. The share of respondents who said this month that jobs were plentiful climbed to 9.4 percent, also the highest since September 2008, from 7 percent.
Sarah Gudernatch, 28, was able to find work before she graduated with her master’s degree from Columbia University in December. She started with San Francisco-based Sustainable Brands in January.
“I went on a total shopping spree the other weekend and spent $500 on clothes,” Gudernatch said. “I hadn’t updated my wardrobe all throughout grad school since I always wore t-shirts and jeans to class.”
Consumer confidence in France unexpectedly jumped by the most in almost five years in March as the euro region’s second- largest economy prepares for a possible change of government.
A measure of sentiment rose to 87 from 82 in February, national statistics office Insee said in Paris today. Economists forecast an unchanged reading, according to the median of 16 estimates in a Bloomberg News survey. The gain was the biggest since May 2007, when Nicolas Sarkozy won France’s presidency promising to bolster household purchasing power.
Elsewhere in Europe, market research company GfK SE predicted that its gauge of German consumer confidence will slip from a 12-month high in April. U.K. retail sales were unchanged in March from a year earlier, and stores expect conditions to worsen next month amid rising unemployment and higher energy prices, the Confederation of British Industry said.
In the U.S., employment growth is starting to shore up housing demand, which may allow the industry that precipitated the recession to contribute to growth this year. The S&P/Case- Shiller index of property values fell 3.8 percent in January from a year earlier following a 4.1 percent decrease the month before, the group said today in New York.
Payrolls increased by 227,000 in February, the third month of gains in excess of 200,000, Labor Department data show. The unemployment rate held at a three-year low of 8.3 percent following five consecutive declines. Worker pay jumped in the last six months of 2011 by the most in almost five years, according to data from the Commerce Department.
Stock-market gains are adding to the wealth of Americans. The S&P 500 climbed yesterday to the highest level since May 2008 and is up almost 13 percent this year through yesterday.
At the same time, rising fuel costs leave consumers less to spend on other goods. A gallon of regular unleaded gasoline has increased to a 10-month high of $3.90 as of yesterday, according to AAA, the nation’s largest automobile association.
“You’ve got a mixed picture right now because the jobs news is actually positive but you do have the spikes in gasoline and food,” said Clarence Otis, chief executive officer of Darden Restaurants Inc. (DRI:US), in a March 23 conference call.
The Orlando, Florida, operator reported a 2.3 percent increase in traffic at its Red Lobster, Olive Garden and LongHorn Steakhouse brands during the third quarter and expects a 2.5 percent to 3 percent increase in same-store sales this year.
Buying plans improved in March, today’s Conference Board figures showed. More Americans said they expected to purchase cars, homes and major appliances in the next six months.
The Conference Board’s gauge of expectations for the next six months fell to 83 from 88.4.
The proportion expecting their incomes to rise over the next six months climbed to a three-month high of 15.8 percent from 15.5 percent. The number projecting better business conditions in the next six months increased to 19.2 percent in March, the highest since April 2011.
Among other measures of confidence, the Bloomberg monthly expectations gauge climbed to a one-year high in March. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell this month to the lowest level this year.
To contact the reporters on this story: Lorraine Woellert in Washington at email@example.com; Shobhana Chandra in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Christopher Wellisz email@example.com