Consumer confidence sank last week to the lowest level in eight months as Americans grew more concerned the budget standoff in Washington hurt the world’s largest economy.
The Bloomberg Consumer Comfort Index declined to minus 36.1 in the period ended Oct. 20, the lowest since February, from minus 34.1. The report also showed more households were pessimistic about the economy than at any time in the past year even as lawmakers approved a deal that ended the partial shutdown of federal agencies.
The agreement to fund the government into early 2014 will probably temporarily help sentiment improve going into the holiday-shopping season. At the same time, data showing hiring has slowed and more Americans have applied for unemployment benefits in recent weeks indicate the job market has lost momentum, which may thwart a pickup in household spending.
“We will probably see some bounce in confidence after these settlements, even though they’re temporary and imperfect,” said Sam Coffin, an economist at UBS Securities LLC in Stamford, Connecticut. “Consumption really is being driven by those labor-market developments, and it looks like they’ve been a little bit softer in the last three months.”
Other reports today showed more Americans than forecast applied for unemployment benefits last week, the trade deficit was little changed in August and jobs openings increased that month.
Stocks rose as earnings from companies such as homebuilder PulteGroup Inc. surpassed estimates. The Standard & Poor’s 500 Index climbed 0.3% to 1,751.34 at 1:50 p.m. in New York.
Shares also got a boost from a report showing manufacturing in China, the world’s second-biggest economy, strengthened more than forecast in October in a sign the recovery is gaining momentum. Similar reports out of Europe showed euro-area services and manufacturing output unexpectedly slowed, while the U.S. index issued by Markit Economics decreased.
Last week’s decline in the U.S. consumer comfort index marked the gauge’s fourth consecutive drop. It’s now fallen almost 13 points since reaching a more than five-year high of minus 23.5 in August.
All three of the index’s components receded last week. The gauge of Americans’ current views on the economy deteriorated to minus 68.2, the lowest since October 2012, from minus 65.3 the week before.