Confidence Index Climbs

Falling energy prices and better job prospects boosted U.S. consumer confidence in September and a regional manufacturing index rose, tempering concerns about an economic slowdown, according to reports Tuesday.

The Conference Board said its index of U.S. consumer confidence rose more sharply than expected in September to 104.5, up from an upwardly revised 100.2 in August, as energy costs fell and job prospects improved slightly.

In August, the index had dropped to a nine-month low, originally reported at 99.6.

Consumers’ inflation expectations also subsided, the consumer survey showed, a trend analysts said would please Federal Reserve policymakers who want to make sure that expectations do not lead to buying decisions that could contribute to inflation.

“A more favorable assessment of current conditions coupled with a less pessimistic short-term outlook boosted consumer confidence this month,” said Lynn Franco, director of the Conference Board Consumer Research Center. “However, even though consumers’ concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”

Although some economists discount consumer sentiment indexes as a leading indicator, many view them as a way to anticipate the strength of consumer spending, which accounts for about two-thirds of U.S. economic activity.

The Federal Reserve Bank of Richmond reported its manufacturing index rose to 9 in September, up from 3 in August and above economists’ expectations for a rise to 5.

Last week, however, the Philadelphia Fed Bank reported a slowdown in its regional business activity, the first drop in three years. The Philadelphia Fed survey is often viewed as a guide to the health of factories nationwide.

The Richmond Fed’s manufacturing shipments index rose to 9 in September from minus 8 in August, its service revenues index rose to 11 in September from 7 in August, and its manufacturing new orders index rose to 10 from 5 in August.