American consumers optimistic

Americans’ outlook of the U.S. economy rose in June to a one-year high, driven by an improving job market that has the potential to boost spending.

The monthly Bloomberg expectations gauge rose to 48.5, the highest since June 2013, from 42.5 the month prior, data today showed. The weekly Bloomberg Consumer Comfort Index for the period ended June 15 advanced to 37.1, approaching the strongest level of the year.

Gains in payrolls that have exceeded 200,000 workers in each of the past four months will probably give households the confidence to spend, bolstering the economy in the second half of the year. A pickup in hiring, and the wages that go with it, will be needed to help consumers cope with the biggest increase in consumer prices in more than a year.

“Sustained improvement in the labor market and modest wage gains appear to be offsetting rising food and gasoline costs,” said Joseph Brusuelas, senior economist at Bloomberg LP. The employment increases are giving Americans “a sunnier disposition,” he said.

Fewer Americans filed applications for unemployment benefits last week, a sign of steady progress in the labor market, according to another report today. Jobless claims fell 6,000 to 312,000 in the week ended June 14, the Labor Department reported. The total number of people collecting benefits decreased to the lowest level in almost seven years.
 

S&P 500
 

Stocks were little changed after the Standard & Poor’s 500 closed at a record yesterday as the Federal Reserve promised to keep interest rates low amid signs of an economic recovery. The S&P 500 rose 0.1% to 1,958.84 at 9:40 a.m. in New York.

The Bloomberg comfort gauge’s sub-index measuring the current state of the economy rose to 27, the highest level since August, from 24.1 the prior week. A measure of personal finances increased to 52.1 from 50.5, while the buying-climate gauge improved to 32 from 31.9.

A stronger economy that’s spurring an increase in shipping prompted FedEx Corp. yesterday to forecast an annual profit that topped some analysts’ projections.

The operator of the world’s largest cargo airline predicted a pickup in domestic and global economic growth. U.S. gross domestic product will expand by 3.1% in 2015 following this year’s 2.2% gain, while the worldwide figure of 3.1% will build on 2014’s 2.7% increase, FedEx said.
 

Full-Time Workers
 

The confidence gap between full-time and part-time workers widened to its largest since late August as optimism jumped among those putting in longer hours. Sentiment among women reached its highest since November 2007, and workers earning more than $100,000 were the most optimistic in eight weeks.

Regionally, Midwesterners’ were more upbeat, reaching a three-month high.

Against the backdrop of a strengthening economy, consumer prices rose 0.4% in May from the prior month, the biggest gain since February 2013, the Labor Department reported this week. The cost of food jumped 0.5%, the most since August 2011.

Confidence among full-time workers was the strongest in almost a year, with the gauge rising to 45.5 from 41.6 the week before. Part-timers were less encouraged as the index dropped by 2.8 points to 31.3. The figure for the unemployed advanced to 30.2 from 29.4.

The results reflect consistent labor market gains. Employment exceeded the pre-recession peak for the first time in May as payroll grew by 217,000. The jobless rate held at 6.3%, matching a six-year low.
 

Women’s Confidence
 

The confidence index among women climbed to 36.9 last week from 36.5 the prior week, according to Bloomberg’s comfort index. Sentiment among men also improved, reaching 37.2.

Most income groups exhibited weekly comfort gains. The gauge for respondents earning $100,000 or more rose to 60.7 from 57.3. It is the sixth time it has exceeded the 60 threshold since start of the recession that began in December 2007.

The outlook was more positive in all regions other than the West, which fell to 35.3 from 38.2 the week before. The Midwest saw its best numbers since early March, touching 36.4%.

Sentiment among homeowners in the U.S. climbed to a five- week high, which helps explain why Lowe’s Cos. is more upbeat about demand.

“We believe stronger job and income growth and gradually loosening credit conditions indicate that the environment for home improvement spending should remain favorable,” Robert Niblock, chief executive officer at Lowe’s, the second-largest home-improvement retailer, said at a May 21 conference.

Since May, the Bloomberg Comfort Index has been presented on a scale of zero to 100 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 eh measures’ relationship to each other or their correlation with other economic indicators. Historical data have been revised and analysis of trends, values and other variables also have not been affected.

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