Consumer confidence climbed last week from an almost two-month low, paced by improving perceptions of personal finances and the buying climate that signal shoppers will return to U.S. retailers as temperatures warm.
The Bloomberg Consumer Comfort Index rose to minus 30 in the period ended March 30 from minus 31.5 which was the weakest since early February. A gauge of whether it’s a good time to purchase needed items improved to the highest since mid-January, while a measure of finances turned positive.
An improving labor market, reflected by a decline in jobless claims and gains in hiring, is helping lower-income Americans cope with higher fuel bills, which will probably help sustain household spending, the biggest part of the economy. An end of harsh winter weather brought customers back to dealer showrooms in March, lifting auto sales to a seven-year high.
“The emergence of job security, illustrated by a slower pace of firings, appears to have trumped rising gasoline prices and the lagged effect of lost work hours during a very difficult winter,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Should this improvement in sentiment and consumer expectations continue, it bodes well for real personal consumption.”
Last week’s advance in consumer comfort capped the best first quarter since 2007.
Another report today showed the number of Americans filing applications for unemployment benefits rose more than forecast last week after reaching a six-month low. Jobless claims increased 16,000 in the period ended March 29 to 326,000 from 310,000 the previous week, the fewest since Sept. 7, the Labor Department reported.
Also today, the U.S. trade deficit reached a five-month high in February, data from the Commerce Department showed. The gap widened 7.7 percent to $42.3 billion as exports declined and imports increased.
Stocks were little changed after the Standard & Poor’s 500 Index (COMFCOMF) set a record yesterday. The S&P 500 climbed less than 0.1 percent to 1,892.6 at 9:40 a.m. in New York.
The comfort survey showed an index of the buying climate rose to minus 37, the best since the week ended Jan. 19, from minus 39. The measure of consumers’ views on their personal finances climbed to 0.5 from minus 2.3 the prior week.
A gauge assessing Americans’ views on the current state of the economy held at minus 53.3, the lowest since early February.
Consumer spending, which accounts for about 70 percent of the economy, climbed in February by the most in three months as a pickup in incomes encouraged Americans to return to stores after bad weather weighed on the economy.
Vehicle sales are rebounding as households shake off the winter blues. Cars and light trucks sold in March at a 16.3 million (SAARTOTL) annualized rate, the fastest since May 2007, following a 15.3 pace the prior month. Purchases at General Motors Co. (GM:US), Ford Motor Co. (F:US), Toyota Motor Corp., Nissan Motor Co. and Chrysler Group LLC all topped analysts’ estimates.
“After a softer January, February, the spring market kind of bloomed in March,” John Felice, Ford’s U.S. sales chief, said on an April 1 conference call with analysts and reporters. There were “encouraging signs coming out of March,” that “bode well” for this quarter.
Among other details of the comfort survey, the measure for unemployed Americans improved to minus 36.3, the sixth consecutive gain. Confidence improved for every income group under $50,000 and retreated for those making more.
A Labor Department report tomorrow may show payrolls expanded by 200,000 workers in March after rising 175,000 in the prior month, according to the median forecast of economists surveyed by Bloomberg. The jobless rate dropped to 6.6 percent from 6.7 percent, according to the projections.
Nonetheless, rising energy costs are a restraint on consumers’ wallets. The price of a gallon of regular gasoline climbed to an average $3.51 in March from $3.35 a month earlier, according to AAA, the biggest U.S. motoring group. It has risen further since then, to reach $3.56 on April 1.
The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points.
The percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative.
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