Consumer confidence high

Consumer confidence rose in April to the highest level since July, boosted by further improvement in the labor market that will provide some traction for the economy after a weather-related slowdown early this year.

The Thomson Reuters/University of Michigan preliminary index of sentiment climbed to 82.6 this month from a four-month low of 80 in March. The median estimate in a Bloomberg survey of economists called for the measure to increase to 81.

More favorable views of current conditions and the outlook show consumers are taking higher prices at grocery stores and gas stations in stride, indicating gains in household purchases will be sustained. More employment opportunities that spur a pickup in wages would help provide a bigger boost for the consumer spending that makes up the largest part of the economy.

“The underlying fundamentals of the economy continue to improve -- we have job growth of around 200,000 a month, declining unemployment rate, income gains weak but positive, and rising house prices,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “I would expect that we’ll see progress over the rest of this year as we continue to see the labor market improve.”

Estimates of the 66 economists in the Bloomberg survey ranged from 79 to 89.8. The index averaged 89 in the five years before December 2007, when the last recession began, and 64.2 in the 18-month contraction that followed.

Stocks dropped, with the Standard & Poor’s 500 Index heading for its biggest weekly decline since January, as disappointing results from JPMorgan Chase & Co. fueled concern that corporate earnings will be weak. The S&P 500 fell 0.4 percent to 1,825.92 at 10:04 a.m. in New York.

Producer Prices

Another report today showed inflation at the producer level climbed more than forecast last month. The Labor Department’s producer-price index increased 0.5 percent in March, the most since June, after a 0.1 percent decrease the prior month. Services costs rose the most in four years and prices of food accelerated.

Today’s figures are at odds with Bloomberg’s weekly measure of sentiment. The Bloomberg Consumer Comfort Index dropped last week to a two-month low as measures of Americans’ views on the economy, their personal finances and the buying climate all declined.

The Michigan survey’s index of expectations six months from now increased to 73.3, the highest since August, from 70 last month. The gauge of current conditions, which measures respondents’ views of their finances, climbed to a four-month high of 97.1 in April from 95.7.

Food, Fuel

Rising gasoline and food prices are straining household budgets. The average price of a gallon of regular gasoline climbed to $3.62 yesterday, the highest since early August, according to AAA, the nation’s largest motoring organization. In 2013, fuel costs averaged $3.49 a gallon.

Americans are paying more at the grocery-store checkout line as well. Food and beverage prices increased 0.4 percent in February, the most since September 2011, after at 0.1 percent rise a month earlier, according to a March 18 Labor Department report.

Today’s figures from the agency showed further increases may be in store. Wholesale food costs jumped 1.1 percent in March, the most since May and led by higher prices for meats, including pork and sausage.

Progress in the labor market may help keep sentiment from faltering. Jobless claims dropped by 32,000 to 300,000 in the week ended April 5, the lowest since May 2007, Labor Department data showed yesterday. The figure was lower than the most optimistic forecast in a Bloomberg survey of economists, while the median estimate called for 320,000 claims.


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