BLBG: Consumer Comfort In U.S. Increases For Third Consecutive Week
Consumer confidence in the U.S. rose for the third straight week as measures of personal finance and the buying climate improved.
The Bloomberg Consumer Comfort Index increased to minus 37.6 in the week ended June 3 from minus 39.3 in the prior period. While the reading was little changed from this year’s average of minus 38.8, it has climbed 6 points since reaching an almost four-month low in mid May.
A 9 percent drop in gasoline prices from the one-year high reached in early April may be overcoming disappointing news on the jobs front and a slump in stocks caused by concern over the outlook in Europe. The less money spent on filling up automobile fuel tanks, the more that can go to buying other goods and services, which will help underpin economic growth.
“Consumers are clearly a bit more optimistic following the sustained decline in gasoline prices over the past two months,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “For now, that is offsetting the economic slowdown and soft employment market, as well as the increasing probability of financial problems in Europe spilling over into the broader global economy.”
Fewer Americans applied for unemployment insurance payments last week, indicating limited progress in the labor market after a two-month slowdown in hiring, figures from the Labor Department showed today. Claims for jobless benefits fell by 12,000 to 377,000 in the week ended June 2 from a revised 389,000 the prior week that was higher than initially estimated.
Shares Climb
Stocks rose as China cut interest rates for the first time since 2008 to bolster growth in the world’s second-largest economy. The Standard & Poor’s 500 Index climbed 1 percent to 1,328.62 at 9:40 a.m. in New York. It advanced 2.3 percent yesterday, the biggest gain of the year.
The Bloomberg measure of Americans’ views of their personal finances rose to minus 3.1 last week from minus 6.4, and a measure of whether consumers consider it a good time to buy climbed to minus 41.6 from minus 45.1.
The index on the current state of the economy declined to minus 68.1 from minus 66.5.
After increasing 16 points in the first three months of the year, the overall measure of consumer sentiment gave back 12.2 points in the ensuing six weeks. The gains over the past three periods may signal another rebound.
“Consumer sentiment clearly broke this week from a losing trend in late April and May, holding some hope it’ll survive the troubled jobs picture that shook both the financial markets and the political crowd last week,” said Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg.
Employment Cools
Payrolls climbed by 69,000 in May, less than the most- pessimistic forecast in a Bloomberg survey, after a revised 77,000 gain in April that was smaller than initially estimated, figures showed June 1. The jobless rate unexpectedly rose to 8.2 percent from 8.1 percent.
“We expect the consumer will continue to regain confidence to spend on larger ticket deferrable purchases but also I believe that recovery will be slow and choppy,” Paul Toms, chief executive officer of Martinsville, Virginia-based Hooker Furniture Corp. (HOFT), said on a June 6 earnings conference call.
A decline in fuel costs may be helping sentiment improve. A gallon of regular gasoline at the pump cost $3.57 on average on June 5, down from an April 4 peak of $3.94, according to data from AAA, the biggest U.S. auto group.
Futures markets signal the price of the fuel could fall another 6 percent, which, combined with the drop over the past two months, would inject $51 billion into Americans’ pockets, according to calculations by Brusuelas.
Democrats, Republicans
Today’s report showed the comfort index has been higher among Democrats than Republicans for a record 11 weeks, beating previous stretches of six weeks in late 1996 and five weeks in mid-2011. The index improved 4.9 points among Democrats and 1.5 points among Republicans.
Sentiment among independent voters rose to minus 37.6 last week from minus 40. The figure is the lowest of the three affiliations, showing lagging confidence among swing voters in this year’s presidential election.
The release marks the 11th consecutive week that Americans with household incomes of at least $100,000 registered positive sentiment. The figure for that group was 10 in the latest report -- close to the one-year high of 10.2 reached in the week ended April 1.
Sentiment among residents in the Northeast was minus 25.9, the highest since the first week of 2008.
Other Measures
The Bloomberg comfort index has been more in sync with the Conference Board’s measure, which showed consumer confidence dropped in May to a four-month low as Americans were more pessimistic about jobs. A sentiment measure from Thomson Reuters/University of Michigan climbed in May to its highest since October 2007.
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers 18 years old and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; 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 index can range from 100, indicating every participant in the survey had positive responses on all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
