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Confidence of U.S. Consumers Rises for First Time in Five Weeks

Feb. 13 (Bloomberg) -- Consumer confidence improved for the first time in five weeks as Americans grew more upbeat about the outlook for the world’s largest economy.

The Bloomberg Consumer Comfort Index increased to minus 30.7 in the week ended Feb. 9 from minus 33.1 the prior period. A measure of the state of the economy jumped to the highest level since September.

A rebound in stock prices last week helped brighten the spirits of the highest income earners at the same time sentiment among full-time employees rose to the highest level since August. Faster job creation that generates stronger wage growth would help propel the consumer spending that accounts for almost 70 percent of the economy.

“The modest rally in equities off January lows last week likely bolstered consumer sentiment, especially among upscale income groups that saw unusually large jumps in sentiment,” said Joe Brusuelas, a senior economist for Bloomberg LP in New York. “That being said, the one-week improvement comes amidst a buying climate for the median household which remains challenging at best.”

Other reports today showed more Americans than forecast filed claims for unemployment benefits last week and retail sales fell in January by the most in 10 months.

Stocks declined after the data. The Standard & Poor’s 500 Index dropped 0.5 percent to 1,810.65 at 9:38 a.m. in New York.

The claims data followed a report last week that showed the labor market is improving in fits and starts. Payrolls rose a less-than-forecast 113,000 in January after a 75,000 increase a month earlier, Labor Department figures showed. The unemployment rate fell to the lowest level since October 2008.

Fed’s Yellen

“The recovery in the labor market is far from complete,” Federal Reserve Chair Janet Yellen said in a testimony before the House Financial Services Committee on Feb. 11. “The unemployment rate is well above levels that Federal Open Market Committee participants estimate is consistent with maximum sustainable employment.

The Bloomberg index gauging Americans’ views of current economic conditions improved to minus 54.5 last week, the highest reading since September, from minus 59.4 the prior period, today’s report showed.

The measure of consumers’ personal finances rose to 3 from 1.2 the prior week, while the index gauging whether it’s a good time to buy improved to minus 40.7 from minus 41.

Household purchases rose 3.2 percent at an annualized rate last quarter, the fastest pace in three years, a Commerce Department report showed last month.

Gains in confidence are helping underpin the outlook for companies such as New York-based Brookfield Property Partners LP, which invests in commercial real estate, office properties and multifamily units.

‘Trending Positive’

“Consumer sentiment has been trending positive,” Chief Executive Officer Rick Clark said on a Feb. 6 earnings call. “Investment activity is clearly up and capital spending is up as well. All of this has led to rising property values, shifting return expectations from capital depreciation to income growth.”

The S&P/Case-Shiller index of home prices in 20 U.S. cities rose in the 12 months through November by the most in almost eight years, a Jan. 28 report showed.

Confidence among the highest earners improved following a rebound in equity prices. The S&P 500 climbed 0.8 percent last week, the first weekly gain since the period ended Jan. 10.

The comfort index for those making $75,000 to $99,000 rose to the highest level since September. For Americans making $100,000 or more, the reading advanced to 11.1 last week after slumping to 2.9 the prior week.

Personal Income

Stagnant wage growth may be damping moods of the lowest earners. Income after taxes and adjusted for inflation dropped in December by the most since January 2013, a report from the Commerce Department showed last month.

While the outlook for households making less than $15,000 a year improved for the first time in seven weeks, the reading of minus 74.5 reading is below any annual average since record- keeping began in 1991.

For those working full time, sentiment last week was the strong since August. For part-time workers and unemployed Americans, the readings also climbed.

Sentiment improved among all age groups and in all regions of the U.S. except the South.

The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the U.S. economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points.

The percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.

The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative.

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