Consumer confidence hits 102.0 - Highest level since January 2004
Well above the 99.0 economists expected.
By Harriet Torry - Wall Street Journal - March 16, 2018
U.S. consumers’ confidence hit a fresh 14-year high this month, as lower-income households reported feeling more optimistic about the economy. The University of Michigan on Friday said the preliminary result of its consumer-sentiment index was 102.0 in March, up from 99.7 in February.
That was the highest level since January 2004, and well above the 99.0 economists surveyed by The Wall Street Journal had expected. The reading “continues what has been a strong run across a range of consumer sentiment measures,” JPMorgan Chase economist Daniel Silver said in a note to clients, adding “this strength in sentiment is one of the reasons we think consumer spending will pick up soon following a soft start to the year.”
The index rose 5.3% in March from a year earlier. A final reading for the month will be released March 29. The latest survey showed optimism improved markedly for households in the bottom third of income distribution.
Sentiment declined for consumers in the top third due to concerns about the outlook for the economy and their personal finances. “In early March, favorable mentions of the tax reform legislation were offset by unfavorable references to the tariffs on steel and aluminum—each was spontaneously cited by one-in-five consumers,” said Richard Curtin, the survey’s chief economist.
U.S. Factories Ramped Up Production in February - Strongest in 7 Years
By Ben Leubsdorf- Wall Street Journal - March 16, 2018
American factories revved up in February, a sign of manufacturing-sector strength supported by businesses investing in new equipment. Industrial production—a measure of total output at U.S. factories, mines and utilities—increased a seasonally adjusted 1.1% in February from the prior month, the Federal Reserve said Friday.
It was the largest gain in four months, since production rebounded following several severe hurricanes last summer, and came after output declined 0.3% in January.
Rising factory production, including automotive and business-equipment manufacturing, and more oil-and-gas extraction last month offset a weather-related decline in utilities output.
Compared with a year earlier, total production rose 4.4% in February, the strongest annual growth in seven years.
“We’re seeing greater support for equipment spending,” and various leading indicators “are all pointing toward more growth going into the rest of the year,” said Gregory Daco, chief U.S. economist at Oxford Economics. “I actually don’t think we’ve peaked.”
The industrial sector in early 2018 moved closer to operating at its full potential. The Fed said capacity utilization, a measure of slack, rose to 78.1% in February, its highest level since January 2015. The measure has averaged 79.8% over the long term, though utilization hasn’t exceeded that level in nearly a decade. As utilization picks up, “there is more-limited spare capacity” available and “gradually we will start to see some upward cost pressures,” Mr. Daco said.
Production in the manufacturing sector rose a strong 1.2% in February from the prior month, including a 1% rise in production of business equipment and a 2.8% gain in output of durable consumer goods, like motor vehicles. U.S. businesses have picked up their capital expenditures over the past year, including robust spending on new machines and other equipment.
A broad business-investment measure, fixed nonresidential investment, rose 6.3% in the fourth quarter compared with a year earlier, the strongest annual growth in over three years, according to Commerce Department data.
A separate gauge of U.S. manufacturing activity produced by the Institute for Supply Management hit 60.8 in February, signaling the strongest pace of expansion since May 2004.
Mining output jumped 4.3% in February, according to Friday’s report. The domestic energy industry ramped up drilling activity after oil prices began climbing last summer, and Baker Hughes reported the number of active rigs across the U.S. rose during February.
Mr. Trump last week signed tariffs on imported steel and aluminum aimed at bolstering domestic production of those metals. Commerce Department reports justifying the tariffs on national-security grounds said capacity utilization in the U.S. steel and aluminum industries should be at least 80%; the agency said steel capacity utilization in 2017 was 72% and aluminum capacity utilization was 39% last year.
