Confidence among U.S. consumers rose in February to the highest level in a year, showing households may sustain spending and drive the economy.
The Conference Board’s index increased more than forecast, to 70.8 from a revised 61.5 in January, figures from the New York-based private research group showed today. Economists predicted the gauge would climb to 63, according to the median estimate in a Bloomberg News survey.
A drop in firings, bigger payroll growth and higher stock prices are supporting consumer sentiment and may spur the spending accounting for about 70 percent of the economy. Americans were more upbeat about job and income prospects in February, helping allay concerns tied to a 44-cent jump in the price of a gallon of gasoline so far this year.
“Consumer sentiment is trending upward,” Kurt Rankin, an economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “The hope here is that sentiment picking up will flow through the rest of the retail economy.”
Estimates for the Conference Board gauge ranged from 58 to 67.8 in the Bloomberg News survey of 77 economists.
Stocks extended gains after the figures, with the Standard & Poor’s 500 Index climbing 0.3 percent to 1,371.2 at 10:02 a.m. in New York. The yield on the benchmark 10-year Treasury note fell to 1.92 percent from 1.93 percent late yesterday.
The group’s measure of present conditions increased to 45 from 38.8 in January. The measure of expectations for the next six months climbed to a one-year high of 88 from 76.7.
Other Confidence Data
Today’s report parallels other data on consumer sentiment. The Bloomberg Consumer Comfort Index climbed to minus 38.4, the highest level this year, in the period ended Feb. 19. The Thomson Reuters/University of Michigan final index of consumer sentiment also rose to a 12-month high of 75.3 in February.
The percent of respondents in the Conference Board survey expecting more jobs to become available in the next six months increased to 18.7 from 16.4 the previous month. The proportion who expect their incomes to rise over the next six months climbed to 15.4 from 13.8 percent in January.
The share of consumers who said jobs are currently hard to get dropped to 38.7 percent, the lowest since November 2008, from 43.3 percent.
Improving job prospects have bolstered household optimism. The unemployment rate declined in January to 8.3 percent, the lowest since February 2009, while the economy generated 243,000 jobs, the most in nine months, data from the Labor Department showed on Feb. 3. The number of jobless claims held last week at the lowest level since March 2008.
Rising equity values could also make Americans feel more confident. The Dow Jones Industrial Average yesterday touched the highest level since May 2008.
“The trend has been improving for both U.S. consumer confidence and employment,” Jeffrey Lorberbaum, chairman and chief executive officer of carpet-maker Mohawk Industries Inc., said during a Feb. 24 conference call. “Our long-term outlook supports a rebound from the low sales levels.”
At the same time, higher fuel costs threaten consumers’ incomes, reducing their ability to maintain current spending levels. A gallon of regular unleaded gasoline climbed to $3.72 yesterday from $3.28 at the end of 2011, according to AAA, the nation’s largest automobile association.
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