SOURCE: Reuters
U.S. consumer confidence edged up in August and prices for U.S. homes gained more than expected in June.
Another report on Tuesday, however, showed business activity in the U.S. Midwest registered a slowdown in August, and was just shy of the pace economists expected.
The Conference Board, an industry group, said its index of U.S. consumer attitudes rose to 53.5 in August from an upwardly revised 51.0 in July.
The median of forecasts from analysts polled by Reuters was for a reading of 50.5. Forecasts ranged from 47.5 to 55.0.
The rise came as a relief to investors following a slew of weaker-than-expected economic reports in recent weeks. High unemployment and weak consumer spending are seen among the biggest hurdles for the recovery.
“This small improvement is encouraging. It suggests that even though consumers remain in a glass-half-empty mood, sentiment isn’t getting any worse,” said Zach Pandl, economist at Nomura Securities International in New York.
“We wonder if this level of confidence will sustain if the labor market deteriorates as we suspect,” he said.
U.S. stocks (.SPX) turned positive following the confidence data, while U.S. Treasury debt prices pared some gains and the U.S. dollar trimmed losses against the yen.
The government’s key monthly jobs report is expected on Friday, with a Reuters poll showing economists expect non-farm payrolls declined by 100,000 in August and the unemployment rate rose slightly to 9.6 percent.
HOME PRICE RECOVERY SLOWS
Also among the day’s more upbeat economic news, the S&P/Case Shiller composite index of 20 metropolitan areas rose 0.3 percent in June from May on a seasonally adjusted basis.
The rise was better than the 0.2 percent increase expected by economists polled by Reuters, though slower than the 0.5 percent rise in May.
However, the gain reflected the lingering boost from homebuyer tax credits that ended in April, and economists agree the effects of buyer tax credits have largely filtered through. They say home prices will be hard-pressed to sustain these gains with unemployment still near 10 percent.
Tuesday’s data also showed the Institute for Supply Management-Chicago business barometer dropped to 56.7 in August. The reading was 62.3 in July, and economists had forecast an August reading of 57.
The employment component of the index fell to 55.5 from 56.6 in July. New orders fell to 55.0, from 64.6. A reading above 50 indicates expansion in the regional economy.
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MY TAKE: With housing prices slowly limping upward and consumer confidence on the rise, it’s possible more aging boomers will begin with their plans. Visit any senior online community and you’ll quickly learn that the again seniors in our country are busy working to set up their lives so that they can live comfortably. They are meeting with senior financial planning companies to try and figure out how they’ll pay for home healthcare providers and of course whether or not their homes will be worth what they are now when they hit retirement.
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