Confidence among U.S. consumers fell to a six-week low and claims for jobless benefits rose more than forecast, highlighting the risks to the economy posed by federal government budget cuts.
The Bloomberg Consumer Comfort Index dropped to minus 34.4 in the week ended March from minus 33.9 as Americans’ views of the economy deteriorated to the lowest point since early February. Applications for unemployment insurance benefits rose by 16,000 to 357,000 last week, the Labor Department said.
The figures represent a blemish for an economy that has shown signs of strengthening on the heels of a housing market rebound and a pickup in manufacturing. Federal Reserve policy makers are concerned the automatic reductions in government spending that began this month may impede the progress of the expansion after a fourth-quarter slowdown.
“There will be some impact from the sequester, and certainly the second quarter should look somewhat softer than the first quarter,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York. At the same time, “it’s domestic growth that’s driving the economy -- it’s housing, it’s consumer spending, it’s business consumption.”
Stocks rose, sending the Standard & Poor’s 500 Index above its record closing level, as the reopening of banks in Cyprus helped ease concern about Europe’s debt crisis. The S&P 500 climbed 0.2% to 1,566.18 at 12:14 p.m. in New York.
The economy in the U.S. grew at a faster pace than previously estimated in the fourth quarter, reflecting a bigger gain in business spending and a smaller trade gap, a report from the Commerce Department showed today. Gross domestic product rose at a 0.4% annual rate, up from a 0.1% prior estimate and following a 3.1% gain in the third quarter.
Elsewhere, German unemployment unexpectedly rose in March. The number of people out of work increased a seasonally adjusted 13,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. The adjusted jobless rate held at 6.9%, close to a two-decade low of 6.8%.
In China, profits at industrial companies jumped 17.2% in the first two months of the year, extending a four- month streak of gains and bolstering a rebound in the world’s second-biggest economy.
Another report showed U.S. business activity expanded in March at a slower pace than forecast. The MNI Chicago Report’s barometer fell to 52.4 this month, the lowest level of the year, from 56.8 in February. A reading greater than 50 signals expansion. The median forecast of 48 economists surveyed by Bloomberg was 56.5.