April 5 (Bloomberg) -- Consumer confidence climbed last week to the highest level in four years and unemployment claims fell, pointing to a brighter job market that may invigorate the U.S. economy.
The Bloomberg Consumer Comfort Index rose to minus 31.4 in the period ended April 1, the best reading since March 2008, from minus 34.7 the prior week. Filings for jobless benefits dropped by 6,000 to 357,000 in the week ended March 31, the fewest since April 2008, the Labor Department said.
Employers probably took on more than 700,000 workers in the first three months of this year, the best quarter for job growth since 2006, a report tomorrow may show, while equities rallied the most since 1998. The improvements may support consumer spending in the face of rising gasoline prices.
“There’s a gradual acceleration underway in the economy,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, and the second-most accurate forecaster of unemployment applications. “Today’s claims data and confidence reading put a positive spin going into tomorrow’s payroll report,” he said, projecting 210,000 jobs were created in March.
The stronger labor market helped reduce consumer-loan delinquencies in the fourth quarter to 2.49 percent from 2.59 percent in the previous three months, the American Bankers Association said. The data showed that for the first time in eight years, all 11 loan categories showed a decrease in delinquencies.
Sentiment is picking up among chief executives as well. The Conference Board in New York said today that its measure of CEO confidence increased to 63 in the first quarter from 49 in the October to December period. Readings greater than 50 show more corporate heads are upbeat about the economy.
Canada is sharing in the labor market recovery. The world’s 10th largest economy added 82,300 jobs in March, the most since 2008, after losing 2,800 the prior month, Statistics Canada said today in Ottawa. The jobless rate dropped to 7.2 percent, the lowest since September.
American payrolls grew by 227,000 in February, capping the best six-month streak of job growth since 2006, Labor Department data showed last month. A report tomorrow will probably show employment increased by 205,000 in March, according to the median forecast in a survey of economists by Bloomberg News.
Stocks in the U.S. erased losses after the jobless claims figures. The S&P 500 rose 0.1 percent to 1,400.64 at 11:06 a.m. in New York.
The Bloomberg consumer sentiment figures showed some good news for President Barack Obama’s re-election bid. Democrats’ confidence rose to minus 25.2, and that of political independents increased to minus 29.1, both the best since 2007.
The measure of Americans’ views of the state of the economy rose to minus 63.6, also the best reading since March 2008, from minus 66.7 the prior week. The personal finances gauge broke into positive territory, climbing to 3.4, the highest level since July. The index of whether consumers consider it a good time to buy rose to minus 33.9 from minus 37.
“Confidence is critical,” Ellen Hughes-Cromwick, chief economist at Ford Motor Co., said April 3 on a conference call with analysts. Recent data show “consumers are pointing to the job prospects. Confidence is sort of keying off the job numbers in some sense.”
Cars and light trucks sold at a 14.3 million annual rate in March, capping the strongest quarter in four years, according to data from Ward’s Automotive Group.
Higher Share Prices
Rising stock values have also probably buoyed sentiment. The Standard & Poor’s 500 Index advanced 12 percent during the first quarter, including a 3.1 percent increase in March. It marked the strongest three-month start to a year since a 13.5 percent advance in the first quarter of 1998.
Among households earning more than $100,000 per year, sentiment climbed to 10.2, the strongest since December 2010.
With a better labor market, more confidence and higher stock values, household spending climbed in February by the most in seven months. Purchases rose 0.8 percent, Commerce Department data showed last week.
“The Bloomberg index’s positive run is all the more impressive because it’s occurred in tandem with steadily 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 $3.94 a gallon yesterday, according to AAA, the nation’s largest motoring club. It has risen 66 cents, or 20 percent, since the year began.
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.
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