Leading U.S. Indicators, Consumer Confidence Gain as Fuel Costs Discounted
U.S. Economy: Leading Indicators
Peter Foley/Bloomberg
The index of U.S. leading indicators increased for a ninth month in March and Americans’ confidence rose for a fourth week, signaling the expansion may withstand higher fuel costs.
The index of U.S. leading indicators increased for a ninth month in March and Americans’ confidence rose for a fourth week, signaling the expansion may withstand higher fuel costs. Photographer: Peter Foley/Bloomberg
April 21 (Bloomberg) -- New applications for unemployment benefits in the U.S. fell less than forecast last week, indicating the labor market will take time to improve. Jobless claims decreased by 13,000 to 403,000 in the week ended April 16, Labor Department figures showed today in Washington. Bloomberg's Michael McKee reports. (Source: Bloomberg)
The index of U.S. leading indicators increased for a ninth month in March and Americans’ confidence rose for a fourth week, signaling the expansion may withstand higher fuel costs.
The Conference Board’s gauge of the outlook for the next three to six months rose 0.4 percent after a revised 1 percent gain in February that was larger than previously estimated, the New York-based group said today. The Bloomberg Consumer Comfort Index climbed to minus 42.6 in the period to April 17, the best reading since the end of February.
Further improvement in the labor market is needed to help accelerate consumer spending, which accounts for about 70 percent of the economy, and sustain recent gains in production. Manufacturing in the Philadelphia area slowed more than forecast and jobless claims fell less than projected, separate data today showed, underscoring the Federal Reserve’s view of a “moderate” economic recovery.
“The pluses continue to outweigh the minuses for the economy,” said Jim O’Sullivan, chief economist at MF Global Inc. in New York. “There’s been a bit of a hit to the economy from rising energy prices, but it still doesn’t look huge. The caveat is, this could change if oil prices continue to rise.”
Stocks advanced as better-than-estimated earnings at companies from Apple Inc. to Morgan Stanley bolstered optimism in the economy. The Standard & Poor’s 500 Index rose 0.5 percent to 1,337.38 at the 4 p.m. close in New York.
Exceeds Forecast
Economists forecast a 0.3 percent March increase in the leading index, according to the median projection in a Bloomberg News survey. Estimates of the 54 economists ranged from a drop of 0.1 percent to a 0.5 percent increase.
Six of the 10 indicators in the leading index contributed to the gain, led by the spread, or difference between the overnight federal funds rate and the yield on the 10-year Treasury note, which boosted the measure by 0.34 point.
Building permits and a gauge of supplier delivery times also contributed positively to the index.
The leading index “continues to point to sustained economic growth through year end,” Ken Goldstein, an economist at the Conference Board, said in a statement. At the same time, “global disruptions, including unrest in the Middle East, rising oil prices and the Japan earthquake, may have some repercussions.”
As the expansion progresses, production gains at the nation’s factories are spilling over into the rest of the economy. CSX Corp. (CSX), the third-biggest U.S. railroad, said yesterday that profit rose 30 percent after shipping volumes increased.
‘Keep Improving’
“We’re continuing to see, quarter after quarter, the markets keep improving,” Chief Executive Officer Michael Ward said in an interview at Bloomberg News’ New York headquarters on April 6.
Rising energy costs and supply-chain disruptions at auto producers like Ford Motor Co. (F) following last month’s earthquake and tsunami in Japan may restrain manufacturing in coming months.
Manufacturing in the Philadelphia region slowed more than forecast in April, at odds with a report last week that showed New York-area factories grew at the fastest rate in a year.
The Federal Reserve Bank of Philadelphia’s general economic index dropped to 18.5, the lowest level since November, from 43.4 the prior month. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Measures of orders and sales declined in April.
Higher Fuel
Four of the Conference Board’s index components retreated, led by a measure of consumer expectations. Sentiment has been depressed in part by rising costs for fuel and food. The average price of a gallon of gasoline was $3.84 on April 20, the highest since September 2008. In March, gas averaged $3.53 a gallon, compared with $2.78 a year earlier.
Higher fuel and food costs may limit consumer purchases of other goods and services, a sign further gains in employment are needed to bolster incomes. A Labor Department report today indicated improvement in the labor market will be slow to develop.
New applications for unemployment benefits dropped by 13,000 to 403,000 in the week ended April 16, the Labor Department said. Economists projected claims at 390,000, according to the median estimate in a Bloomberg survey.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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