Tag: consumer confidence

Consumer Confidence in U.S. Rises to a Seven-Month High

Confidence among American consumers jumped more than forecast in September as a budding housing recovery and rising stock prices gave households reason to be more upbeat.

The Conference Board’s sentiment index increased to 70.3, the highest level in seven months, from 61.3 in August, figures from the New York-based private research group showed today. The reading exceeded the most optimistic projection of economists surveyed by Bloomberg. Another report showed home values rose by the most in two years.

Consumers felt better about their chances of landing a job soon and about the employment outlook over the next six months, today’s report showed, easing one of the impediments to the spending that accounts for 70 percent of the economy. The boost in confidence also comes just over a month before Americans go to the polls, giving President Barack Obama’s re-election prospects a lift.

“The consumer is hanging in there,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “It’s one of the reasons we’re not totally pessimistic about the economy. Spending is growing, but we need more things to contribute.”

Stocks fell on concern global stimulus measures will not be enough to boost growth. The Standard & Poor’s 500 Index dropped 1.1 percent to 1,441.59 at the close in New York, a fourth consecutive decline. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 1.67 percent from 1.71 percent late yesterday.

Global Concerns

Globally, sentiment hasn’t held up as well. French industrial confidence held this month near its lowest in more than two years as the economy stagnates and tax increases loom, figures from the national statistics office Insee showed today in Paris.

In Australia, households are building a financial cushion by repaying mortgages faster and saving more, while businesses are indicating renewed willingness to borrow, the nation’s central bank said.

Estimates for the Conference Board’s U.S. consumer sentiment gauge ranged from 60 to 70 in the Bloomberg survey of 73 economists.

Amelia Guckenberg, 27, an attorney in Richmond, Virginia, is among those Americans sensing the economy is getting better and, as a result, is more comfortable spending.

Incremental Improvement

“I know that the jobs numbers are increasing, not dramatically, but incrementally things are getting better,” she said. “I am definitely pretty conservative when it comes to personal spending, but I am a little more confident now. I feel less worried about spending on myself, taking shopping trips, buying clothing, stuff like that.”

Apple Inc. (AAPL) sold more than 5 million iPhone 8s in the first three days it was available, surpassing a record set last year by the previous model, the Cupertino, California-based company said yesterday. The demand fell short of some analysts’ estimates as the company said supply constraints delayed shipments.

Apple is “working hard to get an iPhone 5 into the hands of every customer who wants one as quickly as possible,” Chief Executive Officer Tim Cook said in the statement.

The Conference Board’s measure of present conditions increased to a five-month high of 50.2 from 46.5 in August. The measure of expectations for the next six months advanced to 83.7, the highest since February, from 71.1.

Hiring Outlook

The percent of respondents expecting more jobs to become available in the next six months climbed to the highest since February, while the share of those who expect their incomes to rise over the same period rose to the highest level of the year.

Stabilization in housing is probably playing a role in the improvement in confidence. Home pricesin July rose 1.2 percent from a year earlier, the biggest 12-month increase since August 2010, according to S&P/Case-Shiller data released today in New York. Property values in July were up 0.4 percent from the previous month. The Federal Housing Finance Agency’s purchase- onlyhome-price index, also released today, showed a 0.2 percent gain in July after 0.6 percent increases the prior two months.

“We’re finally seeing a more sustained and broad-based improvement in home prices,” saidMillan Mulraine, senior U.S. strategist for TD Securities in New York, who correctly projected the year-over-year increase. “The housing sector has made an important turn here, and that is being sustained.”

Also brightening household moods, the S&P 500 has gained 16 percent this year through yesterday.

Other Measures

Today’s confidence report parallels strength in other indicators. The Bloomberg Consumer Comfort Index climbed to a seven-week high in the period ended Sept. 16. The Thomson Reuters/University of Michigan preliminary sentiment index rose this month to the highest level since May.

Improving consumer moods may bolster President Obama, a Democrat, in a campaign that has been largely fought on economic issues.

A survey by the Pew Research Center conducted Sept. 12-16 showed Obama with a 51 percent to 43 percent lead over Republican Mitt Romney among likely voters, a bigger September gap than the last three candidates who went on to win in November. The survey of 2,192 likely voters has a margin of error of plus or minus 2.4 percentage points.

Results of a Gallup poll issued today showed the gain in confidence is tied to political affiliations. Democrats’ views on the economy shot up 10 points in the week ended Sept. 23, while that for Republicans dropped five points, according to Gallup. For independents, a key swing group, sentiment fell four points last week.

Persistent Unemployment

Unemployment, which has exceeded 8 percent for 43 straight months, the longest stretch in records dating back to 1948, remains a concern. That’s why Federal Reserve policy makers this month pledged to continue to buy assets and pump money into the economy until the jobless rate drops.

“The economy is still pretty sluggish with unemployment where it is and with consumer confidence where it is,” Tom Folliard, president and chief executive officer of CarMax Inc., a Richmond, Virginia-based used-vehicle retailer, said during a Sept. 20 earnings call. “I still think we have that kind of the economy hanging over our customer traffic.”

To contact the reporters on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz cwellisz@bloomber.net

Leading the News

Unemployment Claims Continue To Fall.

The CBS Evening News (12/22, story 2, 2:05, Pelley) reported that “there are some other encouraging things about the economy” now, including a drop in the number of people filing for unemployment last week, which fell to 364,000, the lowest “since April of 2008.”

According to Bloomberg News (12/22, Homan, Willis), the 45 economists surveyed by Bloomberg had predicted an average “increase in jobless claims to 380,000,” however “the number of applications” has fallen 40,000 in the last three weeks. Chief US economist for High Frequency Economics, Ian Shepherson, said “this is great news,” and while “one unexpectedly low number can easily be a fluke” and “two are interesting,” three may say “something real is happening in the labor market.” Further, there was a decline of 79,000 in the number of “people continuing to receive jobless benefits,” now down to 3.55 million, the lowest level since September 2008.

According to the AP (12/22, Wagner, Crutsinger), “the steady improvement in the job market is unquestionable,” and BMO Capital Markets senior economist Jennifer Lee says “I think everyone is starting to come around to the view that, yes, there is a recovery going on.” Further, minus “a spike this spring” following damage to “US manufacturing” after the earthquake and tsunami in Japan, “unemployment claims” have been declining “steadily for a year and a half” after peaking “at 659,000 in March 2009.” In the four years prior to “the Great Recession,” the numbers were usually between 300,000 and 350,000.

The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) notes that these weekly unemployment claims may vary due to seasonal differences, but the monthly averages for the past three months have shown declines in unemployment applications, and economists are now predicting a more positive outlook for job hiring.

US Economy Projected To Grow About Two Percent In 2012. The Wall Street Journal (12/23, A4, Dougherty, Subscription Publication, 2.08M) reports that economists are now predicting that in 2012 the US economy will grow at a rate of about two percent based on continued issues in the housing market, tepid job growth, government spending cuts and the economic crisis in Europe. However, this forecast means that 2012 should see a bit more growth than this year’s estimated 1.7 percent yearly growth, and it’s possible that growth will be higher than anticipated in 2012, especially given Q4 2011’s predicted 3.5 percent growth.


Consumer Confidence Edges Higher, Beating Expectations.
Bloomberg News (12/22, Willis) reports, “The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 from 64.1 at the end of November.” A Bloomberg News survey projected that consumer sentiment, or confidence, would increase to “for 68 after a preliminary reading of 67.7.” According to Bloomberg, “a drop in unemployment and lower gasoline prices may be boosting confidence, raising the odds that the pickup in household spending will continue into 2012.”

Canadian Manufacturing On The Rebound.

The Globe and Mail (Toronto, CA) (12/23) reports a slideshow titled, “Manufacturing set for year-end rebound,” noting that “Canadian manufacturing had its second-best month for 2011 in October and analysts expect another increase this month.” The slideshow focuses on the metals sector.

Auto, Energy Industries To Drive Steel Industry Growth.

Following earlier reports on the mixed but generally upbeat predictions for the US steel industry, IndustryWeek (12/23, Katz) reports, “The industry is not expected to reach a full recovery until 2013, according to Fitch Ratings.” Monica Bonar, a senior director at Fitch, said “steel producers are being cautious about how much inventory they’re stocking, including raw materials, on fears of a downturn.” Larry Kavanagh, president of the Steel Market Development Institute, said demand from the auto industry is expected to rise in the coming year, and that “the energy sector presents significant growth potential for the steel industry, led by the boom in shale gas exploration and distribution.”

Missouri Gains 11,000 Manufacturing Jobs.

The Kansas City Business Journal (12/23, Subscription Publication) reports “Missouri gained 10,900 manufacturing jobs between December 2010 and last month, an accomplishment Gov. Jay Nixon lauded Thursday.” Nixon said, “For generations, manufacturing has been a vital driver of Missouri’s economy, and modern manufacturing companies have offered opportunities for outstanding careers to folks across our state.” Nixon “also praised growth yet to come in the state’s automotive sector, particularly Ford Motor Co. and General Motors Co. making historic announcements in October.”

Mass Layoffs Decline In Missouri. Another Kansas City Business Journal (12/23, Subscription Publication) article reports, “Missouri mass layoffs were less common in November, dropping to 22 events compared with 29 a year earlier, the US Department of Labor reported Thursday.” In November, “1,440 Missourians made initial claims for unemployment insurance, down from 2,159 a year prior,” the Labor Department reported. And while “the manufacturing sector claimed a quarter of the mass layoff events,” the article notes that “15 of the 21 manufacturing subcategories saw over-the-year decreases in claims.”

From SME Daily Executive Briefing 12.23.2011