Consumer confidence, spending up in October
A flurry of reports Thursday showed that U.S. consumers are growing more confident and spending more, boosting a still-weak economy just five days before the presidential election.
Consumer confidence surged in October to its highest level in nearly five years. Americans were encouraged by recent declines in the unemployment rate. And they responded by spending more on cars and trucks, at retail businesses and on goods produced at U.S. factories.
Still, businesses remain nervous about where the economy is headed, and that concern could weigh on hiring. The October jobs report, to be released Friday, is expected to show another month of tepid job growth. Superstorm Sandy could also slow economic growth slightly in the final months of the year.
"While short of any glowing upside surprises . . . U.S. economic data are at least all moving in the right direction," Robert Kavcic, an economist at BMO capital Markets, said in note to clients.
Thursday's reports showed:
The Conference Board's consumer confidence index rose to 72.2 last month. That's the highest reading since February 2008. The index is still below the 90 reading consistent with a healthy economy.
Manufacturing expanded for the second straight month, largely because of higher consumer demand. The Institute for Supply Management, a private trade group, said its index of factory activity ticked up to 51.7 in October from 51.5. A reading above 50 indicates expansion.
Weekly unemployment applications fell 9,000 to 363,000 last week. That suggests hiring is unlikely to pick up much from its current pace of about 150,000 new jobs a month.
A report by payroll provider ADP showed that businesses added 158,000 jobs last month, up from 114,000 in the previous month.
Construction spending rose 0.6 percent in September, the Commerce Department said. A healthy gain in spending on home construction and renovation outpaced declines in commercial and government building.
Manufacturing in China also improved in October, although the two surveys released yesterday show factory activity in the region is still struggling to grow. The reports are rare good news for the world economy, which has weakened because of Europe's chronic debt crisis and slower growth in emerging markets such as China, India and Brazil.
The U.S. economy expanded at a 2 percent annual pace in the July-September quarter, up from 1.3 percent in the second quarter. Most economists expect growth may slow a bit in the fourth quarter, partly because of disruptions from superstorm Sandy.