57/$ coming soon, rupee weakest Asian currency: Macquarie

The rupee, which has been the weakest Asian currency month-to-date, is headed to 57/USD soon, cautions Nizam Idris, head of EM FX Strategy, Macquarie.

Unlike many experts, he feels domestic concerns of twin deficit is more to blame for the weakness in the Indian currency than strengthening of the dollar alone.

One should now look to sell dollar/rupee pair, he suggested. The rupee closed at 56.38 to a dollar on Thursday. The dollar index has fallen to 83. The Indian currency depreciated 5 percent in May 2013.

Also read: India’s macro improving, rupee should gain: Baer’s Sama

Below is the verbatim transcript of his interview to CNBC-TV18

Q: Do you see this as an overshoot in the rupee given the way the dollar index has come down or do you see 57 coming soon on the Rupee-Dollar?

A: I see 57 coming soon. With respect to the previous speaker I do think that there are some rupee specific factors. If you look at the Asian currencies performance month-to-date rupee is by far the weakest currency in Asia.

Against the US dollar rupee is down 4.6 percent and you can get a whole range of currencies in between that. Indonesian Rupiah is down by 0.7 percent only, so the rupee has underperformed.

On top of the dollar factor that we are very familiar with right now given the likelihood of QE3 being tapered by the Fed there are also the domestic factors. For me the domestic factor here is the figuration of the market on twin deficits in India. If you look across the rest of the emerging market world then currencies with twin deficits like Brazila and South African rand have all suffered major losses as well this month. Those sorts of market views will be sustained at least for now. I think 57 is a likely target before I look to sell Dollar-Rupee again.

Q: Given the point that you made about these deficit issues would you say this is a lingering problem for the rupee? A lot of traders seemed to be approaching it as a knee-jerk reaction right now and they expect to see the rupee stabilise. Do you think that for the rest of the year the rupee is probably on a weak trajectory?

A: I think this is a combination of the strong dollar. Therefore 57 in my view is very likely, a potential overshoot of that as well. Then on the current account front if you look at the trade data in March and April, gold import has also rebounded very, very strongly.

So, in my view those factors are domestic factors on top of the international strong dollar factor. Going forward I like what I see in the Budget in the focus to reduce Current Account Deficit (CAD). I also hope that the fiscal discipline can be maintained, although as we head towards next year’s election and the food security program to be restarted there is some room for slippages there.

Recent correction healthy, still favour equities: Barclays

Here are experts equity calls for the day on how the markets are expected to trade:

Michael Gavin, Barclays: The recent market correction is healthy as it reflects expectations of the Fed tapering as the US economy recovers and market confidence returns. In such an environment, we still favour equities versus bonds, but are more constructive on cyclical sectors.

Also Read – India’s macro improving, rupee should gain: Baer’s Sama

Chris Wood, CLSA: In Greed & Fear’s view there is growing reason to expect a resumption in the investment cycle in India before the end of the current fiscal year. This is despite the potential uncertainty posed by a general election, due in May 2014. The overweight call on India in the Asia Pacific ex-Japan portfolio will be increased by a further 1 percentage point this week.

Japan deflation persists, industrial output falls

Japan’s core consumer price index fell 0.4 percent in April from a year earlier, while industrial production also weakened, the government reported Friday.

The data offer scant evidence of a rebound, though officials say the economy is on the cusp of a recovery and should show stronger gains by midyear.

Also Read: The sun will rise: Why investors still love Japan

Industrial production fell 2.3 percent from a year earlier though it was up a seasonally adjusted 1.7 percent from the month before. The strongest gains were in autos and other transport equipment and in electronic components and devices, according to the Ministry of Economy, Industry and Trade.

Despite recent turmoil in financial markets, Prime Minister Shinzo Abe has vowed to persist in aggressive monetary easing and stimulus spending aimed at helping Japan break out of deflation, or falling prices, that has contributed to two decades of economic stagnation.

“No action, no growth,” he declared to a group of economic experts gathered this week in Tokyo to assess his “Abenomics” policies.

Japan`s benchmark Nikkei 225 stock index was trading 2.1 percent higher early Friday after tumbling 5.2 percent the day before, as investors responded to retreats in other major markets.

Abe characterized recent market gyrations as “routine financial phenomena.”

“We must not allow ourselves to be distracted and intimidated by the crisis conditions we face,” said economy minister Akira Amari.

Though the Nikkei remains around 30 percent higher for the year, boosted by optimism over the Bank of Japan`s unprecedented monetary easing, it`s down 13 percent from its peak on May 22, reflecting doubt over whether the government`s economic strategy can extricate the country from years of economic malaise.

The prospect of more yen in circulation, which is intended to boost inflation, has weighed on the currency. The yen has fallen sharply to the relief of the country`s exporters and that weakening is pushing up prices, in yen terms, for imported crude oil and other commodities. That is expected to help the central bank eventually reach its target of 2 percent inflation within the next two years.

But apart from a 4.2 percent increase in utilities costs, many other prices remained lower in April, the Management and Coordination Agency reported. It said the overall CPI, including food and energy prices, fell 0.7 percent from a year earlier as costs for vegetables, education and entertainment, fell, but rose 0.3 percent from the month before. Core inflation, excluding food prices, also rose 0.3 percent from a year earlier.

Japan`s unemployment rate remained flat, at 4.1 percent, despite the government`s insistence that Abe`s policies are improving labor and wage conditions.

Without a strong improvement in incomes, which have been declining, any recovery in the consumer spending needed to help boost demand and sustain the recovery will be short-lived, economists say.

“Wage increases need to be realized in the labor market,” said Kenji Umetani of the Cabinet`s Economic and Social Research Institute. “This increase will be realized only if the expectation of future income growth is strengthened and holds.”

May raise USD 500 million via ECB: HDFC’s Keki Mistry

India’s largest mortgage lender HDFC continues to grow its business banking on its core expertise on home loans and real estate. An impressive growth trajectory has made it a favourite with investors. Since last one year, HDFC shares surged more than 40 percent as against a rise of 23 percent in the sensitive index Sensex.

In between March 31, 2009 and March 31, 2013; the loan book nearly doubled from Rs 85,200 crore to Rs 1.70 lakh crore. During the same time, bank non-food credit grew nearly 90 percent to Rs 51.66 lakh crore from Rs 27.24 lakh crore.

However, the only challenge it faces currently is to sustain the growth momentum. According to its vice-chairman and CEO Keki Mistry, the lender is unlikely to see sharp fluctuation in its business growth.

“We will target individual loan growth of 18-20 percent over a sustained period of time on a CAGR basis. It might however, be a little higher or lower in certain years,” he told moneycontrol.com in an exclusive interview.

Moreover, he sees enough demand for home loans this year ruling out the possibility of any asset price bubble. He advocates the need of fast-paced expansion of housing sector. As many as 276 industries in India large and small depend on the housing sector bearing positive economic impact.

Under the government’s proposed ECB window for affordable housing HDFC may raise around USD 500 million (or around Rs 2,800 crore) for affordable housing.

Below is the edited excerpt of the interview:

Q. What is the secret sauce behind HDFC’s persistent growth story?

A. HDFC specializes only in home loans. Thus, we is in a position to understand the market dynamics better. Having been in this business for over 35 years, it has gained in-depth knowledge of the real estate market and constantly endeavored to empower the customer in making the right decision while buying a home.

The consumer needs solutions, not loans. Our systems are all centralized. For example, residing in Pune or elsewhere in India one can apply home loan for a property located anywhere in India.

Distribution is today one of the biggest strengths of HDFC. We are present in all major towns and cities. Last year, HDFC Sales, our wholly owned subsidiary sourced 46% of our loans, HDFC Bank generated 28 percent and other direct sales agents (largely comprising some banks and NBFCs) added another 15 percent. The balance is through walk-ins to HDFC branches.

Our entire loan appraisal process is carried out in-house. We ensure that the quality of loans originated is uniform irrespective of channel partners.

We have also tied up with developers all across the country. In addition, our subsidiaries including HDFC Red and HDFC Realty offer real estate services to assist customers to buy, sell or lease properties.

Q. Will you be able to sustain current pace of growth?

A. We have always said that we will target individual loan growth of 18-20 percent over a sustained period of time on a CAGR basis. It might however, be a little higher or lower in certain years. Despite economic slowdown, FY13 was an excellent year for us as the growth in retail loans (after adding back loans sold in the previous 12 months) was 31 percent year-on-year.

Q. How will expansion in housing sector add to economic revival?

A. In Budget 2014, the finance minister had provided some tax benefits to house buyers. If you are the first time home buyer and taking a loan of less than Rs 25 lakh and the property value is less than Rs 40 lakh, then in addition to the existing tax benefits, you will also be entitled to a one- time tax benefit of up to Rs 1 lakh in respect of the interest payment.

However the loan has to be availed between April 1, 2013 and March 31, 2014. The objective is to give a spurt to the economy as housing supports many other industries like cement, steel, paint, carpentry and others. According to an estimate, there are 276 industries in India large and small, which depend on the housing sector. It also generates large employment. Hence, the government is trying to push the growth in the economy.

Q. FII share holding in HDFC Ltd is pretty high nearly at 74 percent. What is the key trigger to attract overseas investment?

A. We have always been largely owned by foreign institutions. However these are all portfolio investors who have bought shares in the secondary market. If you look at the last 18-20 months, we have had nearly US$ 5 billion of HDFC stock (equity shares) that has come to the market. We had Citi Bank, which sold nearly 11.5 percent, private equity player Carlyle sold 4.5 percent.

In addition, we had warrants that were converted into equity shares. These have largely been purchased by portfolio investors and FIIs. We have more than 1000 foreign institutional investors (FIIs) who have invested in our stock from all over the globe and a large number of them have been investors for longer time.

Q. What is your outlook on interest rates?

A. I expect RBI to cut the repo rate by another 50 basis points in 2013.

WPI inflation has come down at 4.89 percent and commodity prices have also come off their peak. If this sustains, it will provide RBI the impetus to cut rates going forward. Further if we have good monsoon, inflation will steadily keep sliding downwards. However in my view, RBI will not indulge in aggressive rate cuts and would probably cut rates steadily over next six months.

We need to however keep a close eye on the currency. The fairly sharp depreciation in the rupee over the last few days is a worry – as it worsens the CAD and could fuel inflationary worries once again.

Q. Will you cut rates by the end of June quarter?

A. It all depends on cost of funds. Historically, our spreads (rate difference between funds borrowed and lent) have been in the range of 2.15 to 2.35 percent. Most of the time, it has been between 2.25 and 2.35 percent. We will continue to maintain this range. If there is any benefit in terms of lower cost of funds, which leads to enhancing our spreads, we will certainly pass on the benefit to our customers.

Q. RBI slashed the policy rate by 75 bps in 2013. Why are lenders not cutting lending rates?

A. The total amount of money in the banking system stands at around Rs 75 trillion (lakh crore). Banks have been borrowing about Rs 1 trillion (lakh crore) from RBI on a daily basis. So, when RBI cuts rate it is less than 2 percent of bank funds wherein they get benefit of RBI rate reduction while, the cost of funds does not change on the remaining 98 percent.

In my view, the ability of banks to cut the lending rates will come only when they start reducing deposit rates. To do that they probably need to see more liquidity in the system. I am reasonably sure that will happen in the near future. We must also remember that deposit growth in the banking system last year was fairly muted.

Q. How effective is repo rate cut for lenders? Is the clamour for CRR cut justified?

A. Repo rate cut is a signal to the market for a lower interest rate regime. However, it has to be followed through with a cut in the deposit rates by banks. When there is liquidity in the system, banks will be able decrease deposit rates.

The clamor for CRR cuts is linked with liquidity only. There are various ways of injecting liquidity in the system. CRR is only one of those ways besides government spending and RBI’s OMOs (open market operations).

Q. Tell us something about your borrowing book?

A. We have always kept an extremely flexible approach to funding. We will continue with that approach.

Deposits are 33 percent of funding. Term loans and bonds constitute 67 percent. Hopefully, we will also have the ability to raise funds through external commercial borrowings (ECBs). Government has said that one billion dollar can be borrowed through ECB for affordable housing. We may plan to raise around USD 500 million for affordable housing.

Q. How do you rank HDFC compared to other big home loan providers?

A. As I have explained earlier that we are a specialised home loan provider which helps us to serve the customers better. The focus on housing is always better in any housing finance company. For a bank, home loan is one of their multiple existing products. For HFCs, it is the only one with deep understanding of the product.

Q. What are hurdles for affordable housing in India?

A. The biggest hurdle is the high cost of construction and the high land price. In big cities, availability of land is a big issue. Also the process of getting various approvals can be very time consuming. This increases the interest cost for builders and is ultimately passed on to the buyers.

We have to find a mechanism to make land prices cheaper for low income projects and also each state has to expedite the process of granting approval if we want to make affordable housing a reality.

Q. Do you see any asset price bubble on the anvil?

A. The question of bubble comes in when people buy homes only for investment purposes and later, prices plunge due to indiscriminate selling. We don’t see that happening.

However, India is a large country. There might be some pockets where you will see some people investing in properties. In those parts, you could see some correction in property prices. It would not be a major event and cannot be categorised as a bubble.

Q. Do you see prices in Mumbai dropping any time soon?

A. For prices in Mumbai to come down, supply has to increase significantly by permitting existing buildings to go higher through FSI increase. However for that we need significantly better infrastructure wherein connectivity is good, supported with all amenities like roads, water, sewage, hospitals and schools.

Buffett picks up Las Vegas-based NV Energy for $5.6 bn

Berkshire Hathaway Inc’s power production unit MidAmerican Energy will pay USD 5.6 billion for NV Energy Inc , the electric utility that serves Las Vegas and its power-hungry casinos.

Also read: Torrent Power fixes book closure for dividend

MidAmerican Energy Holdings Co will purchase NV Energy’s common stock for USD 23.75 per share, a 23 percent premium to NV’s Wednesday closing price.

“This is a great fit for Berkshire Hathaway, and we are pleased to make a long-term investment in Nevada’s economy,” Berkshire Hathaway Chairman Warren Buffett said in a statement.

Las Vegas-based NV Energy, which serves about 2.4 million people in Nevada, said last month it would accelerate the retirement of its coal-fired power generating facilities and the construction of natural gas and renewable power plants.

“By joining forces with MidAmerican, we will gain access to additional operational and financial resources,” NV Energy Chief Executive Michael Yackira said.

Once the deal is complete, MidAmerican Energy will have assets of about USD 66 billion and its regulated electric and gas utilities will serve 8.4 million customers.

Sundaram Finance to deepen presence in FY14, net up 15%

Non-banking finance company Sundaram Finance will lay focus on penetrating market segments like financing light commercial vehicles and by deepening its presence in the country in 2013-14, a top official today said.

Society of Indian Automobile Manufacturers forecast for 2013-14 is not particularly rosy, Sundaram Finance, Managing Director, T T Srinivasaraghavan told reporters here.

“Those are challenges we are faced with. We believe in 2013-14 also like 2012-13, going to be lot of headwinds. So, we have to depend on our own abilities to find opportunities within the available market spaces. And then to find growth either penetrating into new market segments or through increasing market share,” he said.

The company for the financial year ending March 31, 2013 reported a 15.4 percent growth in net profit at Rs 410 crore as compared to Rs 355 crore registered during the same period of previous year, he said.

Besides, the company was able to increase its disbursements by six percent to Rs 9,991 crore for the financial year ending March 31, 2013 from Rs 9,432 crore.

“Last year (2012-13) we crossed one milestone. Our networth gone past the Rs 2,000 crore mark”, he said.

On the proposal to deepen the company’s presence in the country, he said the company has about 100 stores in Maharashtra, Gujarat, and close to 50 in Punjab, New Delhi, Hyderabad and Uttaranchal.

“We will be looking at opening up of new branches. We will also deepen our presence in North, West and Central India where we already have a strong presence. Actually, it will be a combination of many things…”, he said.

To a query, he said: “We have recently entered into LCV segment. There is a lot of headroom to grow in the LCV space.

Volumes are large in this space and we believe that opportunity presents itself for growth”.

Noting that the company’s asset quality continues to be the best in the industry, he said: “The company last year gained market share in medium and commercial vehicle space around 10 percent.”

The board of Sundaram Finance at its meeting today have recommended a final dividend of Rs 4.50 per share. This along with interim dividend of Rs 4.50 per share, takes the total dividend for financial year 2012-13 to Rs 9 per share.

The company had issued bonus shares in the ratio of 1:1 during financial year 2012-13.

At ‘BBB+’, RIL gets best-ever S&P rating

Reliance Industries Ltd today got a shot in the arm from Standard & Poor’s, which upgraded its credit rating to `BBB+’ from `BBB’ – RIL’s best-ever, and two notches above the Sovereign rating – making the Mukesh Ambani -led firm the best rated firm in India.

When contacted, RIL Group Chief Financial Officer Alok Agarwal told PTI: “We are elated at the development as this rating upgrade is the best-ever we have had.”

Also read: Pavana Enterprises sells 2 crore shares of RIL

S&P Asia Pacific Managing Director and analytical manager for corporates and infrastructure ratings team Suzanne Smith said in a conference call from Singapore: “We have upgraded Reliance to BBB+ from BBB, with a negative outlook, because we believe RIL’s strategy to grow organically will strengthen its competitive position and support its profitability.” She said the global rating agency now has “greater clarity on Reliance’s expansion strategy.

The company intends to spend more than USD 30 billion on growth over the next three years, of which at least 75 per cent will be toward its core businesses of refining, petrochemical, and exploration and production”.

`BBB+’ is an investment grade rating indicating relatively lesser risk. `BBB’ is defined by S&P as “adequate capacity to meet financial commitments, but more subject to adverse economic conditions”.

The US-based agency’s credit analyst for the region, Andrew Wong said “RIL’s articulation of its growth strategy removes the uncertainty regarding use of its high cash balance,” which stood at close to Rs 83,000 crore at FY13-end.

Asked what was the new trigger for the rating upgrade, S&P Director for corporates and infrastructure ratings team for the region Mehul Sukkawala said the move follows their meeting with RIL management recently.

It brought greater clarity on the company’s investment strategy and its better competitive position in the marketplace following its focus on shale gas development as well as its ongoing USD 30 billion investment in the petrochem and refining businesses, he said.

About assigning higher than the sovereign rating, Sukkawala said that RIL, with a BBB rating, was already rated higher than the national rating at BBB-. And after today’s upgrade it stands two notches above the sovereign rating.

Sukkawala said IT giants TCS , Infosys and Wipro (BBB from S&P) already enjoy higher rating than the sovereign.

See tremendous increase in volumes ahead: TBZ

Fall in bullion prices will drive volumes going ahead as the focus of consumers will shift from diamond to goldjewellery, believes Prem Hinduja, CEO, Tribhovandas Bhimji Zaveri ( TBZ ).

Sale of diamond jewellery reaps higher margins than gold, but, volume growth in gold jewellery will makeup for margins in absolute terms, he added.

For quarter-ended March 2013, TBZ reported 13 percent gross margin from sale of gold and 35 percent from diamonds. “Purely on operating margin basis, about 10-11 percent is what we get on gold and about 34-35 percent on diamond, so we expect to do it further also,” he said.

TBZ saw a sharp jump in standalone net profit in Q4, which rose more than three times to Rs 24.89 crore from Rs 7.545 crore in the same quarter last year. Net sales for the quarter increased 66.85% to Rs 447.3 crore.

Also read: Don’t see fall in gold jewellery demand: Titan

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Gold has been so volatile. What kind of implications has it had for your operations and earnings, the kind of wild swings in gold or the decline in gold prices that we have witnessed?

A: The decline in gold prices has doubled our volume growth, which we had experienced in the past also in 1997 and also in 2008. It was history repeating itself. Whenever there is a sharp decline in the price of gold we find that the consumers come out in big numbers to buy because there is a fear psychology that before the price rises, let us start buying.

It becomes a big contributor to the top-line of the company and consequently to the operating margins and the bottom-line of the company.

Q: We do not have your Q4 margins? What is it that you have done in margins for this quarter and what is it that you expect to do, given the point you were making about gold and its impact on volume growth?

A: In Q4 we have done 13 percent gross margin on gold and 35 percent on diamonds. That is more or less what we usually do; about 10-11 percent on gold on a pure operating margin basis and about 34-35 percent on diamond. We expect to do the same going forward also.

Q: Given the early trends that you are talking about what do you think Q1 would look like in terms of volume growth?

A: The volume growth will go up tremendously and that is the trend we have seen at present. What is happening is that because of the fall in the price of gold, the focus has shifted to gold and people are buying gold jewellery in a big way. So, there is a slight shift in the focus from diamond jewellery to gold jewellery sales,

However, overall the volume growth, will more than makeup in absolute terms the margins coming down on a blended basis because diamonds give a slightly higher margin than gold. That is what we are seeing now that there is more focus on gold because of the drop in the price of gold. But the volume jump has given us a big boost in terms of absolute margin basis.

Q: You do not fear though that if this price slide in gold continues, this kind of volume growth might not be there, because people may buy the first fall in gold, but if they see a continuous trend of decline you volumes could start getting hampered?

A: Not really. We as a business are more focused on wedding and wedding related purchases, which is basically compulsion buying. So, whether the price of gold goes up or down people keep on buying. And since weddings are going to take place, the market is growing. The marriage age population is also growing.

Usually, people come up with a fixed budget when they make wedding purchases, so irrespective of the fact, whether the price is up or down they do spend according to their budget.

If the price is down they will get a bigger volume of jewellery purchase and if the price is up they get a smaller volume, but the amount they want to spend in absolute term remains the same.

IMF urges China to push reforms, control credit

China needs to make a “decisive push” to launch new market-oriented reforms and has to control rapid credit growth that could lead to financial problems, the International Monetary Fund said Wednesday.

The fund trimmed its growth forecast for China this year from eight percent to 7.75 percent due to weaker global demand but said the Chinese economy should remain robust.

Also read: Chinese city bans anti-refinery protests before trade fair

President Xi Jinping and other leaders who took power in November have promised to make China’s economy more productive but have yet to disclose details. The World Bank and other advisers say Beijing urgently needs to curb the dominance of state companies and promote free-market competition or growth will decline sharply.

In meetings with visiting IMF officials, Chinese leaders emphasized their desire to nurture “more balanced, inclusive” growth, said David Lipton, a deputy IMF managing director.

“They need continued liberalization and reduced government involvement (in the economy), allowing a greater role for market forces,” Lipton told reporters.

The government-dominated economy requires “a decisive push to promote rebalancing — rebalancing toward higher household incomes,” he said.

A key hurdle for reformers will be potential resistance within the ruling Communist Party to changes that might hurt revenues for politically favored state companies that dominate industries including banking, telecommunications, shipping and energy.

“Allowing more competition in sectors currently considered strategic would improve economic growth,” said Lipton. He said change will require “strong determination.”

The IMF also stressed the need for Beijing to pay attention to explosive credit growth that has helped to drive its economic rebound.

Private sector analysts estimate “total social financing” — the government’s term for credit from both the state-owned banking industry and informal private sources — rose 58 percent in the first quarter over a year earlier.

Lipton said the rapid rise in lending increased the risk that some investments might be of poor quality and borrowers might default.

“Growth has become more dependent — perhaps too dependent — on the continued expansion of investment,” Lipton said. “Reining in total social financing and its growth is a priority.”

Economic gains boost US confidence to 5-year high

Home prices are surging, job growth is strengthening and stocks are setting record highs. All of which explains why Americans are more hopeful about the economy than at any other point in five years.

Investors on Tuesday celebrated the latest buoyant reports on consumer confidence and housing prices, which together suggest that growth could accelerate in the second half of 2013.

Also read: Moody`s: Outlook for US banks raised to `Stable`

Greater confidence could spur people to spend more and help offset tax increases and federal spending cuts. And the fastest rise in home prices in seven years might lead more Americans to put houses on the market, easing supply shortages that have kept the housing recovery from taking off.

Tuesday’s report from the Conference Board, a private research group, showed that consumer confidence jumped in May to a reading of 76.2, up from 69 in April. That’s the highest level since February 2008, two months after the Great Recession officially began.

A separate report showed that US home prices jumped nearly 11 percent in March compared with a year ago, the sharpest 12-month increase since April 2006. Prices rose year over year in all 20 cities in the Standard & Poor’s Case-Shiller home price index.

The economic news helped send the Dow Jones industrial average up 106 points to close at a record. The Dow has rocketed nearly 18 percent this year. And the Standard & Poor’s 500 stock index is on track for its seventh straight monthly gain, the longest winning streak since 2009.

Surging stock prices and steady home-price increases have allowed Americans to regain the USD 16 trillion in wealth they lost to the Great Recession. Higher wealth tends to embolden people to spend more. Some economists have said the increase in home prices alone could boost consumer spending enough to offset a Social Security tax increase that has reduced paychecks for most Americans this year.

The Conference Board survey said consumers are also more optimistic about the next six months. That should translate into greater consumer spending, substantial growth in hiring and faster economic growth in the second half of 2013, said Thomas Feltmate, an economist with TD Economics.

Michael Quintos, head of a Chicago advertising agency that helps small businesses market themselves through social media, sees more optimism at work and among friends and relatives.

“A year ago, I had more friends asking me if I knew anybody who was hiring,” Quintos said. “Now I have more people who are hiring asking me if I know anyone looking for a job.”

At work, Quintos is finding it easier to land customers. In the past couple of months, businesses that have asked about his services have been more likely to follow through and hire him. A year ago, most were wary.

“I`ve had more work than I can handle,” Quintos said. As a result, his firm hired a web designer last week.

The Conference Board found that optimism is growing mostly among those earning more than the median household income of roughly USD 50,000. For those households, the confidence index jumped to 95.1 from 85.3.

Among most other income groups, confidence either rose more slowly or fell. For those earning USD 15,000 to USD 24,999, for example, the confidence index rose modestly, from 52.6 to 55.9. And for those earning
USD 25,000 to USD 34,999, it slipped from 59.8 to 57.9.

Economists say the disparity points to the gain in stock prices, which mostly benefits more affluent Americans.

Consumers’ outlook on the job market also improved last month. The percentage who said jobs are plentiful rose, and the percentage who said they’re hard to find declined. Economists say the shift suggests that the pace of hiring could pick