S&P: U.S. consumer staples resilient

Standard & Poor's said in a report that the consumer staples sector should be resilient to any slowdown in consumer spending in 2008, although industry credit quality may take a hit.

Fairly inelastic demand for food, beverages, tobacco and nondurable household and personal products should allow the sector to maintain a steady revenue stream, the agency said. Credit quality could suffer, however, because leverage looks high and the consolidation trend is likely to continue.

"Typically, the consumer staples sector fares better than other sectors during economic downturns or periods of uncertainty," Parul Jain, an S&P director, said in a written statement. "The slowing economy and stubborn consumer price inflation are unlikely to dent spending on consumer staples."

Companies with exposure to overseas markets will benefit from the weak dollar but sector profit margins will be hurt by rising input costs and interest expenses, the agency added.

Marginally higher unemployment rates, continued income growth and household formation should support spending on staples, S&P noted.

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