Consumer confidence rose last week to the highest level in four years as job gains put more Americans in the mood to spend.
The Bloomberg Consumer Comfort Index climbed to minus 33.7 in the period to March 11, the strongest since March 2008, from minus 36.7 the previous week. A buying-climate gauge reached the highest level since November 2007, and a measure of the state of the economy had its best showing since September 2008.
The bounce in sentiment coincides with gains in employment and a pickup in incomes that are giving households the means to withstand rising fuel bills. A rally in stock prices also bodes well for consumer spending, which accounts for about 70 percent of the economy.
“Improvement in the labor market has boosted the confidence of consumers,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Wage gains are “bolstering retail sales and consumer confidence despite rising gasoline costs.”
Since its inception in December 1985, the comfort index has averaged minus 15.2.
Manufacturing in the New York region expanded in March at the fastest pace since June 2010, indicating factories are still driving the expansion, another report showed.
The Federal Reserve Bank of New York’s general economic index unexpectedly increased to 20.2 this month from 19.5 in February. The median forecast in a Bloomberg survey of economists was 17.5. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
Claims for jobless benefits dropped more than projected last week, matching the lowest level in four years. Applications for unemployment insurance declined by 14,000 to 351,000 in the week ended March 10, the Labor Department said today.
Higher fuel costs drove wholesale prices up in February by the most in five months, another report showed. The producer price index climbed 0.4 percent after a 0.1 percent gain in January, according to the Labor Department. The core measure, which excludes food and energy, rose 0.2 percent, less than in the prior month.
Stocks were little changed after the reports, with the Standard & Poor’s 500 Index gaining less than 0.1 percent to 1,394.88 at 9:37 a.m. in New York.
The measure of Americans’ views of the state of the economy rose to minus 67.1 last week from minus 70 the prior week, today’s report showed. The index of whether it’s a good time to buy increased to minus 33.7 from minus 40.4. The gauge of personal finances was little changed at minus 0.5, compared with 0.3 the prior week.
Gains in retail sales indicate households are following through. Purchases at stores and malls advanced 1.1 percent in February, the most in five months, after a 0.6 percent rise in January that was larger than previously estimated.
Clothing stores and auto dealers were among those showing improving demand last month. Cars and light trucks sold last month at the fastest pace in four years, according to Ward’s Automotive Group.
Delhaize Group SA, the owner of the U.S. Food Lion supermarkets, this month said the improvement in the labor market is encouraging.
“There are some good forward-looking economic indicators here in the U.S. that would help give all of us some optimism,” Ronald Hodge, chief executive officer of Delhaize’s U.S. business, said on a March 8 conference call with analysts.
A pickup in hiring is probably responsible in part for the gains in spending. Payrolls grew by 227,000 in February after a 284,000 gain in January, capping the best six-month streak of job growth since 2006. The unemployment rate held at a three-year low of 8.3 percent following five consecutive declines. Worker pay jumped in the last six months of 2011 by the most in almost five years.
“Breaks in the ice of unemployment have more than compensated this year for rising gasoline prices,” Gary Langer, president of Langer Research Associates LLC in New York, which compiles the index for Bloomberg, said in a statement.
The average price of regular gasoline at the pump climbed to a 10-month high of $3.82 a gallon yesterday.
Today’s report also showed sentiment among black Americans improved to the highest level since March 2007, exceeding the reading for whites by the biggest margin in records dating back to 1990. The comfort gauge among women climbed to the highest level since July 2008.
Full-time workers and people living in the South were among the groups that registered their highest levels of confidence in four years. The comfort gauge for political independents, a key swing group during this year’s election, improved to minus 29.9, the best reading since 2007, the year before voters last went to the polls to pick a new president.
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers aged 18 and over. 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 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. The margin of error for the headline reading is 3 percentage points.
Field work for the index is done by SSRS/Social Science Research Solutions in Media, Pennsylvania.