Consumer Confidence in U.S. Bounces Back on Job Gains

Confidence among U.S. consumers rose for the first time in three weeks on cheaper fuel costs and an improving job market.

The Bloomberg Consumer Comfort Index advanced to 36.8 in the period ended Aug. 10 from 36.2 the prior period, which was the lowest level since June 8. The gain was led by improving views on household finances and the economy.

The creation of more than a million jobs in the past four months is helping buoy spirits even as wage gains have failed to accelerate. The lowest gasoline prices since March are also providing relief for household budgets.

“Consumer attitudes have improved in lock step with the gains in employment and the steep declines in prices at the pump,” said Richard Yamarone, a senior economist at Bloomberg LP in New York. “These are the two drivers of consumer sentiment.”

Another report today showed applications for unemployment benefits rose more than forecast last week, interrupting a steady decline to pre-recession lows. Jobless claims climbed by 21,000 to 311,000 in the period ended Aug. 9, the highest in six weeks, according to the Labor Department.

Stocks rose for a second day as investors weighed the claims data and speculation the crisis in Ukraine won’t escalate. The Standard & Poor’s 500 Index advanced 0.2 percent to 1,950.56 at 9:36 a.m. in New York.

The gauge of personal finances climbed to 51.3 last week from 50.1 in the previous period, which was the lowest in more than two months. The measure of the economy advanced to 26.8, a five-week high, from 25.8.

Sentiment about whether or not it’s a good time to buy waned last week, with the buying-climate index falling to 32.3 from 32.6. A report yesterday showed retail sales were little changed in July, the worst performance in six months, as purchases at department, furniture and electronics stores fell.

Gasoline Prices

Americans’ outlooks brightened in part as gasoline prices continued to fall. A gallon of regular gas cost an average $3.47 on Aug. 12, down 21 cents from the June high.

Further gains in the job market would also give consumers the impetus to spend. Payroll gains have topped 200,000 for six straight months, a stretch unseen since 1997, according to the Labor Department. Job openings rose 94,000 to 4.67 million in June, the highest level in more than 13 years, the agency said earlier this week.

The improving conditions are encouraging more job seekers into the labor force, helping explain why the unemployment rate rose to 6.2 percent last month from 6.1 percent.

Weekly Earnings

Even with increased hiring, wages are lagging behind. Inflation-adjusted average weekly earnings dropped 0.2 percent in the 12 months through June, the worst performance since October 2012

Retailers such as Macy’s Inc., that rely on back-to-school sales revenues, are hopeful employment gains will translate into more consumer spending, which makes up 70 percent of the economy.

“Our outlook for the fall season reflects our confident optimism tempered with the reality that many customers still are feeling the impact of an economic environment that at best is improving very gradually,” Karen Hoguet, chief financial officer at Macy’s Inc., said on an earnings call on Aug. 13.

The second-largest U.S. department-store chain posted earnings of 80 cents a share last quarter, missing the 86-cent average of analysts’ estimates compiled by Bloomberg. The Cincinnati-based company also cut its annual sales forecast, saying a second-half rebound was unlikely to make up for a sluggish year.

Income Groups

Today’s comfort figures showed sentiment strengthened among high- and low- income earners last week, while middle-income groups were less optimistic. Confidence among Americans with incomes of $100,000 or more rose 5.2 points to a five-week high of 60. Confidence of those making more than $50,000 climbed to its highest level since April, while the index of workers earning between $40,000 and $50,000 dropped to a six-week low.

Sentiment among full-time workers improved to a seven-week high, and also rose for those employed part-time.

Confidence in three of the four U.S. regions climbed last week. The gauge in the Northeast rose for the first time in five weeks, while the South reached a two-month high. Comfort in the West dropped to a five-week low.

The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.

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