This Week's Economic Roundup
Despite a downturn in spending and income, renewed strengths in the job market have consumers in a better mood. Here's a look at this week's economic developments and how they may impact your business.
Consumer Confidence Grows
Gains in the job market improved consumer confidence in January, while the longer-term outlook declined, the Conference Board said Tuesday.
Based on a survey of 5,000 households nationwide, the New York-based private research group's consumer confidence index edged up to 110.3 from 110 in December, compared to a baseline level of 100.
The gains were credited to renewed strengths in the job market, the group said.
Of those surveyed, 19.7 percent said jobs were "hard to get," compared to 21.3 percent the previous month, while saying jobs were "plentiful" rose to 29.9 percent from 27.6 percent, the group said.
"Looking ahead, however, consumers are not as optimistic as they were in December," Lynn Franco, director of group's research center, said in a statement. "All in all, the index suggests a moderate improvement in the pace of growth in early 2007."
Consumer Spending Eases
Despite the more favorable outlook, consumers were spending less in December, while incomes grew at a slower pace, the Commerce Department reported Thursday.
Adjusted for inflation, consumer spending rose 0.3 percent in December, following gains of 0.5 percent over the two previous months, the report said. At the same time, real disposable income -- including all forms of personal revenue -- rose just 0.2 percent, the weakest gains in seven months.
Excluding energy and food costs, core inflation increased by just 0.1 percent, the report said.
Construction Spending Falls
Total construction spending fell by 0.4 percent in December, while spending for the year rose by 4.8 percent over 2005, the Commerce Department said Wednesday.
Spending on private construction projects in December declined by 0.8 percent from the previous month, dropping to a seasonally adjusted annual rate of $896.8 billion, the report said.
The total value of private construction last year was $928.7 billion, a 3.3 percent increase from 2005, the report said.
Meanwhile, pending home sales -- based on total sales contracts -- rose 4.9 percent in December, the National Association of Realtors reported Thursday.
The monthly gain was the biggest since March 2004, the report said.
"It appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," David Lereah, the trade group's chief economist, said in a statement.
Private Employment Rebounds
Following declines in recent months, private employment rose by 0.1 percent in January, a national employment-services firm reported Wednesday.
On a seasonally adjusted basis, non-farm payrolls grew by 152,000 in January, according to Roseland, N.J.-based Automatic Data Processing.
Sharp declines in December likely reflected year-end updates of employment records, the report said.
Last week, new claims for unemployment benefits dropped by 20,000 to 307,000, the Labor Department reported Thursday.
The seasonally adjusted insured unemployment rate -- a gauge of the number of people drawing unemployment claims -- was 1.9 percent in the week ending Jan. 20, unchanged from the previous week, the report said.
The biggest declines in new claims were in Pennsylvania, Michigan, and Tennessee, while the largest increases were in Kansas and Washington, the report said.