Tags: Consumer | Confidence | Economy | Labor Market

Consumer Confidence Decreases From Six-Year High

Tuesday, 29 April 2014 12:57 PM

Confidence among U.S. consumers declined in April from a six-year high as Americans became less enthusiastic about the economy and labor market.

The Conference Board’s index decreased to 82.3 from 83.9 a month earlier that was stronger than initially estimated and the highest since January 2008, the New York-based private research group said. The median forecast in a Bloomberg survey of 78 economists called for a reading of 83.2.

Limited gains in the stock market this year, rising prices at the gas pump and a slowdown in the housing market tied in part to higher interest rates risk leaving Americans less sanguine about their finances. At the same time, more anticipated an increase in employment opportunities in the next six months, which would help keep sentiment and consumer spending from faltering.

“The wage picture hasn’t really shifted, and confidence in terms of assets — whether it’s stocks or home values — has really petered out,” Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, said before the report.

Still, with a decline in the number of firings and employers boosting headcount, “you have a backdrop in place where you could see a little bit of a grind higher in consumer confidence.”

Estimates of consumer sentiment ranged from 80.8 to 87.8 in the Bloomberg survey after a previously reported March reading of 82.3. The Conference Board’s measure averaged 53.7 in the recession that ended in June 2009. It’s averaged 63.2 during the current expansion.

Home Prices

Another report showed property values cooled in February. The S&P/Case-Shiller index of property prices in 20 U.S. cities increased 12.9 percent from February 2013 after a 13.2 percent gain in the year ended in January, a report from the group showed in New York.

The Conference Board’s gauge of present conditions dropped to a three-month low of 78.3 after 82.5 in March. The barometer of consumer expectations for the next six months was little changed at 84.9 after 84.8 a month earlier.

“Consumer confidence declined slightly in April as consumers assessed current business and labor-market conditions less favorably than in March,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “However, their expectations regarding the short-term outlook for the economy and labor market held steady.”

Employment Expectations

The share of respondents who said they expected their incomes to rise increased to an eight-month high of 17.1 percent in April from 15.3 percent a month earlier. The proportion of Americans who said jobs would become more plentiful in the next six months climbed to 15 percent from 14.1 percent.

The spread between those who said work opportunities are easy to get and those who said they’re currently scarce worsened from March.

Fewer Americans indicated in the confidence survey that they plan to buy automobiles in the next six months, while more looked to purchase previously owned homes.

A faster pace of hiring and stronger income gains may be needed to boost sentiment.

Payrolls climbed by 192,000 workers in March after a 197,000 increase the previous month that was larger than first estimated, the Labor Department said earlier this month.

Private payrolls, which exclude those at government agencies, exceeded the pre-recession peak for the first time.

April Employment

Employers added 215,000 workers in April, according to the Bloomberg survey median before a May 2 report. The unemployment rate is projected to fall to 6.6 percent from 6.7 percent, according to the survey.

Further gains in confidence about the economy and household finances may encourage more Americans to travel this summer, providing a spark for companies such as Choice Hotels International Inc., whose brands include Comfort Inn and Econo Lodge.

“We’re off to a very strong start for 2014,” Stephen Joyce, president and chief executive officer, at Choice Hotels, said on an earnings call. “Consumers are more upbeat about future job growth in the overall economy. Reports show that consumers are expecting the economy to continue improving and rising expectations suggest the economy may pick up some more momentum over the next few months.”

The Silver Spring, Maryland-based company said revenue per available room rose 5.6 percent in the first quarter as occupancy rates increased.

Improving Economy

The pickup in occupancy was due in part to an “improving U.S. economy as well as declining unemployment rates,” David White, the company’s chief financial officer, said on the call.

Signs the economy is emerging from a slowdown in first- quarter demand indicate Federal Reserve policy makers, who begin a two-day meeting Tuesday, will stick to plans for a gradual reduction in the asset purchases.

At the same time, the central bankers have pledged to keep interest rates near zero until the jobless rate falls further and inflation rises toward a 2 percent goal.

“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Fed Chair Janet Yellen said earlier this month to the Economic Club of New York.

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Confidence among U.S. consumers declined in April from a six-year high as Americans became less enthusiastic about the economy and labor market.
Consumer, Confidence, Economy, Labor Market
Tuesday, 29 April 2014 12:57 PM
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