Confidence among U.S. consumers rose for a third straight week, indicating an improving job market is shoring up Americans’ attitudes toward their finances and the economy.
The Bloomberg Consumer Comfort Index climbed to minus 43 in the period to April 10, the best showing since the end of February, following a minus 44.5 reading the prior week. Other reports today showed surging fuel costs pushed wholesale prices up last month and jobless claims unexpectedly climbed last week.
Employment picked up over the past two months, just in time to help households maintain spending as higher grocery and fuel bills strained budgets. Nonetheless, inflation has hurt buying power, one reason why economists project purchases in the first quarter grew at about half the pace as in the previous three months.
The comfort index “has shown a little bit of stability and that’s encouraging,” said Robert Brusca, president of Fact & Opinion Economics in New York, who correctly forecast the gain. “There has been more job growth. The economy has gotten better. The consumer got hit pretty hard on energy prices but after a while they get used to it and it affects them less.”
A Labor Department report today showed claims for jobless benefits increased by 27,000 to 412,000 in the week ended April 9, reflecting greater-than-normal volatility at the end of the quarter. The increase in applications traditionally seen at the beginning of a quarter was larger than usual this year, a Labor Department spokesman said as the figures were released.
“Hiring will accelerate over the next few months,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “This is a temporary blip and the labor market will continue to heal.”
The producer-price index increased 0.7 percent in March, another report from the Labor Department showed. So-called core costs, which exclude volatile food and energy prices, rose 0.3 percent, exceeding the median forecast of economists surveyed by Bloomberg News.
Stocks rose, erasing an early slump, as the House approved a spending bill that will avert a government shutdown. The Standard & Poor’s 500 Index climbed less than 0.1 percent to 1,314.52 at the 4 p.m. close in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.50 percent from 3.46 percent late yesterday.
The latest results for the comfort survey reflected improvements in all three subcomponents. The index of Americans’ views of the economy rose to minus 80.4 last week from minus 82.5 the prior week.
The measure of personal finances increased to minus 0.5 from minus 0.9, while the index of the buying climate climbed to minus 48 from minus 50. The gauges on personal finances and buying climate are the highest since February.
Figures from the Commerce Department yesterday reinforced the results of the confidence survey that indicated Americans are still spending even as fuel costs jump. The report showed sales at retailers increased 0.4 percent in March, a ninth consecutive gain, following a 1.1 percent advance the prior month that was larger than previously estimated. Demand grew in 10 of 13 major categories.
“Customers may feel better about their employment situation, but are uneasy due to higher fuel, food, clothing and other costs, as well as geopolitical issues around the globe,” Robert Hull, chief financial officer at Mooresville, North Carolina-based Lowe’s Cos., the second-biggest U.S. home-improvement retailer, said in an April 13 teleconference
The average price of regular gasoline at the pump rose 11 cents to $3.77 a gallon in the week ended April 10, according to AAA, the nation’s biggest motoring organization. It climbed to $3.81 yesterday, the highest since September 2008.
The economy created 216,000 jobs in March, the most since May, and the jobless rate fell to a two-year low of 8.8 percent, Labor Department data showed April 1.
Reflecting the labor market outlook, the comfort gauges improved last week for Americans with full- and part-time jobs, as well as for those who were unemployed.
Consumer spending from January through March probably climbed at a 2 percent annual rate after growing at a 4 percent rate in the previous three months, according to the median forecast of economists surveyed by Bloomberg this month.
Today’s report on wholesale prices showed costs excluding food and energy climbed 1.9 percent in the 12 months ended in March, up from a 1.8 percent increase the prior month and the biggest year-over-year gain since August 2009.
Growth in China and other emerging economies and a weakening dollar are pushing up commodity costs, prompting companies like ConAgra Foods Inc. to boost prices.
“The recent and continued inflationary environment has made it necessary to take prices up responsibly,” Gary Rodkin, president and chief executive officer of the Omaha, Nebraska-based company, said on a March 24 conference call. “Inflation and the consumer mindset will continue to be challenging.”
Increases in raw-materials have opened a rift among Federal Reserve policy makers between those that view the gains as temporary and those that believe it will lead to a pickup in inflation.
Fed Chairman Ben S. Bernanke, Vice Chairman Janet Yellen and Federal Reserve Bank of New York President William C. Dudley are among those who’ve said the economic expansion is still too fragile, the unemployment rate is too high and that commodity prices will probably have only a short-term influence on inflation.
That’s put them at odds with Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Richard Fisher, his counterpart at the Federal Reserve Bank of Dallas, who have said the central bank should consider removing monetary stimulus this year before inflation flares.