After weakening sharply at the start of the new year, Conference Board’s consumer confidence picked up again in February. The consumer confidence indicator rose from 58.4 to 69.6, while a limited increase to 62 was forecast. The details show that consumers were again more optimistic on their present situation (63.3 from 56.2), but expectations improved even more (from 59.9 to 73.8). The labour market indicator edged up too, rising from -28.1 to -26.5. After a sharp deterioration in consumer sentiment at the start of the new year, due to tax increases, consumers have apparently adapted rapidly to the higher tax rate. They probably focused on improving labour market conditions and a rebound in the US housing market, which is an encouraging sign for consumer spending in the coming months.
In February, the Richmond Fed manufacturing index showed a remarkable rebound, reversing the previous month’s plunge. The headline index rose from -12 to 6, while a more limited increase (to -4) was forecast. The details are encouraging too, although slightly less than the headline figure. Shipments (10 from -11), number of employees (8 from -5) and capacity utilization (11 from -18) showed a remarkable rebound. New orders (0 from -17) and vendor lead time (0 from -4) picked up from the previous month, but only to levels pointing on a stagnation. Average workweek (-2 from -) and order backlog (-12 from -19) remained in contraction territory. The forward-looking, six months from now index, edged up significantly too, from 18 to 28, suggesting that business providers are positive on their outlook too. After poor regional business confidence indicators in January, they are now showing signs of improvement in some areas, although regional differences remain. The broader manufacturing ISM is forecast to weaken slightly, but will remain probably at decent levels.
At the start of the new year, US new home sales showed a remarkable rebound, surging to the highest level since end 2008. New home sales jumped by 15.6% M/M to 437 000 in January, while an increase by 3.0% was expected. The breakdown shows that surge was led by the West (45.3% M/M) and Northeast (27.6% M/M), but sales increased also in the Midwest (11.1% M/M) and South (3.2% M/M). The number of new homes for sale stayed unchanged at 150 000 and months’ supply dropped from 4.8 to 4.1, the leanest inventory since March 2005. Low inventories might start to restrict new home sales in the coming months. Nevertheless strong sales and low inventories might boost construction activity further in the coming months and quarters.