US consumer confidence improves
By Jennifer Hughes in New York
US consumer confidence unexpectedly improved this month, according to a new survey, but soft personal income and spending data undermined the upbeat report.
The University of Michigan's leading index of sentiment rose to 95.8 from 94.4 in February, outstripping economists' expectations that it would slide below 94. Both the current conditions component and the forward-looking expectations measure registered an improvement.
"Although these levels remain below what they were at the turn of the year this report is most certainly a positive boost for markets and a significant rise from February's levels," said analysts at ING Financial Markets.
But the impact on financial markets was muted on Friday following soft personal income and spending figures released earlier by the Commerce Department (news - web sites). Personal income rose by a better-than-expected $34.1bn, or 0.4 per cent, last month while disposable income also rose by 0.4 per cent to $30.2bn, but personal spending rose by just 0.2 per cent after increasing by 0.5 per cent in January.
Real spending was flat on the month - the first time it has not risen since September.
Henry Willmore, economist at Barclays Capital, was sanguine about the slowdown in spending, which he linked with a paring back of car financing initiatives offered in the fourth-quarter.
"As has been the case in recent years, these programmes were scaled back in the first quarter, resulting in a significant decline in auto sales," he said, predicting a pick-up in car sales in the spring months.
The personal consumption expenditure deflator, known to be the Federal Reserve (news - web sites)'s preferred inflation indicator, was also soft. It rose just 0.1 per cent last month and by 1.1 per cent year-on-year.
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