points in February 2011 to 70.4 from a downwardly revised 64.8 level
in January (the index's methodology was changed and the data revised
retrospectively to show 65.6 in January following the initially
reported increase to 60.6). Market expectations were for a slight
retracement in the index to 64.9. The labour market differential
(those saying jobs are "plentiful" less respondents saying jobs are
"hard to get") posted its best reading since July 2010, by improving
to -40.8 from the prior month's -42.4 (previously reported as -40.8).
The better than expected rise in consumer confidence in February
reflected improvements in both in the "expectations" and the "present
situation" components. The expectations component was the main
contributor to the gain, rising to 95.1 from 87.3 in January, and led
by an improvement in the outlooks for business conditions and
employment. The sub-index now stands at its highest level since
December 2006. The present situation index posted a more moderate
gain, increasing to 33.4 from 31.1 in January. Consumers' appraisal of
job market was more positive than last month, with the "jobs hard to
get" index declining to 45.7 from 47.0 in January, and the "jobs
plentiful" index increased to 4.9 from 4.6. These numbers resulted in
the employment differential improving to -40.8 from -42.4 in January,
which was the best reading in this measure since July 2010.
With today's unexpected jump, consumer confidence in the US is at a
post-recession high. With that said, this gauge of consumer attitudes
still remains well below the pre-recession peak of 111.9 as seen in
July 2007. Weak labour market conditions continue to weigh on
confidence, with the reported labour market differential remaining in
deep deficit. As well, given that a large portion of Americans have
their wealth tied to their homes, depressed and falling home prices
are putting significant pressure on household finances and influencing
overall consumer views. The persistently elevated unemployment rate
and lack of a sustained housing market rebound are among the main
reasons why we expect that the Fed will not make any changes to its
monetary policy stance in the near term.
In a separate release this morning, December's S&P/Case-Shiller
20-City Composite measure of U.S. house prices fell for the sixth
straight month, although dropping by a slightly smaller than expected
0.4% on a seasonally-adjusted basis from November (market expectations
were for a 0.5% decline). The monthly decline brings the measure
within one percentage point of the recessionary low seen in May 2009.
On a year-over-year basis, the pace of decline in the unadjusted index
accelerated for the third straight month, by falling 2.4% compared to
the 1.6% drop seen in November. The decrease was the largest 12-month
decline since December 2009 when the index fell 3.1%.
Source: ActionForex.Com
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