Consumer confidence improves as hiring in U.S. picks up
CONSUMER CONFIDENCE climbed in the U.S. as companies added more workers than projected in December.
BLOOMBERG FILE PHOTO/TIM BOYLE
By Shobhana Chandra and Lorraine Woellert Bloomberg News
WASHINGTON - Consumer sentiment climbed last week and U.S. companies added more workers than projected in December, showing the world’s largest economy picked up even as lawmakers were embroiled in budget disputes.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier, according to a report today. Figures from the ADP Research Institute showed a 215,000 increase in employment, the largest since February, while the Labor Department said more Americans filed claims for jobless benefits last week.
This week’s agreement averting income-tax increases on about 99 percent of households, combined with the pickup in hiring, may give confidence an added lift after spending at stores from Nordstrom Inc. to Gap Inc. topped analysts’ estimates last month. A strengthening economy lowers the risk that further deliberations on government spending cuts and the debt will derail the expansion.
“The economy is growing quite well,” said David Sloan, a New York-based senior economist at 4Cast Inc., the best ADP forecaster over the past two years, according to data compiled by Bloomberg. “The labor market seems to be expanding at a fairly solid pace. Consumer spending will continue to grow, but slowly.”
Stocks erased early losses after the ADP report and as retailers picked up on better-than-projected monthly sales. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,463.58 at 11:44 a.m. in New York. The S&P 500 surged 2.5 percent yesterday, the biggest one-day jump since December 2011, after Congress passed the bill averting tax increases and government spending cuts slated to take effect this year.
The median forecast of 36 economists surveyed by Bloomberg called for a 140,000 gain in ADP’s hiring data. Estimates ranged from increases of 70,000 to 210,000. The prior month’s advance was revised up to 148,000 from a previously reported 118,000 gain. ADP had estimated that superstorm Sandy reduced payrolls in November by about 86,000.
A Labor Department report tomorrow may show private payrolls, which exclude government agencies, rose by 150,000 last month, and the jobless rate held at an almost four-year low of 7.7 percent, according to the Bloomberg survey median.
“The job market held firm in December despite the intensifying fiscal cliff negotiations in Washington,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. “Businesses even became somewhat more aggressive in their hiring at year-end.” Moody’s produces the figures with ADP.
Economists at Deutsche Bank Securities Inc. and Credit Suisse raised their forecasts for December employment after the ADP report. Credit Suisse now projects a gain of 195,000 in private payrolls from a prior estimate of 175,000. Deutsche Bank added 40,000 to its projection, raising it to 205,000.
Winnebago Industries Inc., a Forest City, Iowa-based maker of motor homes, is among companies expanding staff and adding work hours as it increases production. The company hired about 160 people, or 12 percent more hourly employees, in the quarter ended Dec. 1.
“We’re still supplementing by working overtime in many, many areas of the company,” Sarah Nielsen, chief financial officer, said on an earnings conference call on Dec. 20. “That’s been a factor for the last six months plus. And we’re going to have to continue to hire to support attrition.”
A report today showed the employment situation in Europe’s largest economy may be stabilizing. German unemployment increased less than economists forecast in December even as Europe’s debt crisis curbed company investment and economic growth.