Claims for jobless benefits dropped last week to match a four-year low, and U.S. consumer confidence rose to the highest since 2008, signaling an improving labor market may boost household spending.
Applications for unemployment insurance payments fell by 14,000 to 351,000 in the period ended March 10, Labor Department figures showed today. The Bloomberg Consumer Comfort Index rose to minus 33.7 from minus 36.7 in the week ended March 11.
“There’s a steady, sustained improvement in the labor market,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who was ranked the most-accurate forecaster of personal spending over the two years through February, according to data compiled by Bloomberg. “As more people have jobs, confidence is picking up. This is consistent with pretty solid gains in consumer spending.”
Prospects for stronger household demand, along with investment in new equipment, helped sustain manufacturing in the New York and Philadelphia regions this month, reports from the Federal Reserve showed today. At the same time, wholesale prices climbed in February by the most in five months, a reminder that higher gasoline costs pose a risk to corporate and consumer spending.
U.S. stocks advanced on the data, sending the Standard & Poor’s 500 Index above 1,400 for the first time in almost four years. The index rose 0.6 percent to 1,402.60 at the 4 p.m. close of trading in New York. The yield on the 10-year Treasury note was little changed at 2.28 percent.
The median estimate in a Bloomberg News survey of 52 economists called for 357,000 jobless claims. The Labor Department revised the prior week’s applications to 365,000 from the initially reported 362,000.
Companies have slowed the pace of firings and are expanding their workforces as sales rise and the threat of financial contagion from a European default diminishes. Job growth in February capped the best six months since 2006, and the unemployment rate stayed at 8.3 percent, a three-year low.
“The economy seems to have regained its footing and is now on the way up,” said Edmund Phelps, director of the Center on Capitalism and Society at Columbia University in New York and a Nobel Prize-winning economist. “It’s a good sign that companies are confident enough to be beginning to get their stock of employees back up to more normal levels.”
TopJob Staffing, Inc. in Roswell, Georgia, which provides part-time bartenders and banquet employees for company events, this month added a full-time corporate staff manager. It was the first full-time manager added in seven years, President Scott Harb said.
“Our big corporate accounts and country clubs are calling us more frequently,” said Harb, 47. “When companies cut back, hospitality is the first thing to go. It came back in 2010 and was sustained in 2011.”
Brighter job prospects and rising wages are giving consumers the means to spend more. 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.
“We’re seeing some improvement in the environment” for the American consumer, Stuart Burgdoerfer, chief financial officer at Limited Brands Inc., said today at a conference in Boston. Columbus, Ohio-based Limited Brands operates the Victoria’s Secret lingerie chain and Bath & Body Works stores.
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.
The confidence report’s measure of the buying climate reached the highest level since November 2007, and a gauge of the state of the economy had its best showing since September 2008.
Lauren Barnard, 24, switched jobs last month after she was recruited by a San Francisco-based public relations company that specializes in technology. Barnard said she got a higher salary and is now considering buying a new car.
“I feel more comfortable spending money, going out to eat and getting drinks, and I think it’s the same for my friends,” said Barnard, a client executive. “I don’t have a fear that I’m going to lose my job anytime soon. I feel really comfortable. One of my friends even just bought a house, which is pretty cool.”
Stock gains are also lifting consumer spirits as household wealth grows. The S&P 500 Index has climbed almost 12 percent this year.
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.
Manufacturers remain at the forefront of the nearly three-year economic expansion.
The Federal Reserve Bank of New York’s general economic index increased to 20.2 this month, the highest since June 2010, from 19.5 in February. Readings greater than zero signal growth in New York, northern New Jersey and southern Connecticut.
A similar index from the Philadelphia Fed showed manufacturing in eastern Pennsylvania, southern New Jersey and Delaware expanded at the fastest pace in 11 months as factory employment picked up.
Rising fuel costs threaten to curb corporate profits and consumer spending. The average price of regular gasoline at the pump climbed to a 10-month high of $3.82 a gallon yesterday.
Today’s Labor Department report showed the producer-price index rose 0.4 percent in February following a 0.1 percent increase the prior month.
Stepped-up hiring prompted Fed policy makers this week to raise their assessment of the economy, while repeating that interest rates are likely to stay low at least through late 2014.