Consumer Confidence Drops in April

U.S. consumer confidence fell during April as higher energy prices and a declining stock market tempered optimism about economic growth.

The Conference Board’s gauge of sentiment dropped to 108.8 last month from 110.7 in March. April’s index fell less than expected, while a report from Chicago purchasing executives suggested a manufacturing recovery has taken root.

“The fundamentals in the economy appear to be very sound and set the stage for continued expansion,” said Richard Clarida, assistant Treasury secretary for economic policy.

Consumer spending accounts for two-thirds of gross domestic product, and the confidence survey showed more people plan to buy appliances, autos and houses in the next six months than did in March.

Manufacturing in the Chicago region grew in April for a third straight month, according to a survey by the National Assn. of Purchasing Management--Chicago. Although the group’s factory index fell to 54.7 from 55.7, any reading above 50 indicates expansion.

Recovery may be leading to higher prices for some materials. The index of prices paid for raw materials rose to 55.4, the highest in a year, from 51.2.

The regional report supports economists’ expectations that a survey today will show that manufacturing expanded nationwide in April for a third month.

In a third report, U.S. corporate profits fell 6.3% in the first quarter. Sales fell 4.7%, according to Thomson Financial/First Call. The results, based on 390 of the S&P; 500 index companies that reported results as of Monday, suggest a resurgent economy may not give much boost to corporate earnings.