U.S. consumer confidence soars; house prices rising

A combination of harsh winter weather, a now-settled labor dispute at the country's busy West Coast ports, softer global demand and a strong dollar dampened growth early in the first quarter.

The moderation in activity is a replay of early 2014, when an unseasonably cold winter caused a contraction in output, which was followed by a sharp rebound in growth.

"The consumer confidence report points to a more upbeat outlook for the recovery ahead," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The Conference Board said on Tuesday its index of consumer attitudes rose to 101.3 this month from 98.8 in February. That was well above economists' expectations for a reading of 96.

While consumers were less optimistic about the short-term outlook, they had greater confidence in the labor market, with the share of those anticipating more jobs in the months ahead increasing significantly.

The proportion of consumers expecting income growth also rose solidly, which should help to underpin consumer spending.

"All the conditions are in place for a sizeable acceleration (in consumption) in the second quarter," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

U.S. stocks were trading marginally lower, while the dollar gained against a basket of currencies. Prices for U.S. Treasury debt rose.

FACTORIES STRUGGLING

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, has been soft in the last three months, despite households receiving a massive windfall from lower gasoline prices. Some of the weakness has been blamed on harsh weather that kept shoppers at home.

A second report on Tuesday underscored the economy's weakness in the first quarter. The Institute for Supply Management-Chicago said its Business Barometer edged up to 46.3 from 45.8 in February.

A reading below 50 indicates contraction in the region's manufacturing sector. New orders contracted for a second straight month, while inventories rose sharply.

Economists said the persistently weak readings suggested the strong dollar and weak global demand are acting as a drag on manufacturing.

"The manufacturing sector is more exposed than the non-manufacturing sector to the negative effects of dollar appreciation and weaker foreign growth," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

A third report showed single-family home prices rose in January from a year earlier, boosted by a shortage of properties on the market.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.6 percent in January on a year-over-year basis after rising 4.4 percent in December.

Gains were led by strong increases in the South and West. Denver and Miami reported the highest year-over-year gains, with prices increasing 8.4 percent and 8.3 percent, respectively, over the last 12 months. Dallas ranked third with a gain of 8.1 percent and San Francisco was fourth with a 7.9 percent increase.

"The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices," said David Blitzer, chairman of the Index Committee for S&P Dow Jones Indices.

(Reporting by Ryan Vlastelica, Burn Burns, Rodrigo Campos; Writing by Lucia Mutikani; Editing by Paul Simao)