Confidence among U.S. consumers rose more than projected in November, offering additional support to the biggest part of the economy.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 64.2 this month, the highest since June, from 60.9 in October. The median estimate of economists surveyed by Bloomberg News called for a reading of 61.5.
Fewer claims for jobless benefits that culminate in more hiring may also bolster confidence at a time when Europe’s debt crisis poses a risk to global growth and prompts stock-market volatility. Sustained gains in household sentiment, which has been lingering at levels seen during the last recession, may bolster consumer spending that accounts for about 70 percent of the economy.
“It’s good news that we’re finally starting to get an improvement in confidence because it’s long overdue,” said Robert Brusca, chief economist at Fact & Opinion Economics in New York. “If we continue to put people back to work, and I think it’s a real trend, then maybe there is something cooking and maybe there is some opportunity to gather momentum.”
Stocks rallied after the figures and as Italy’s approval of debt-reduction plans eased concern about Europe’s debt crisis. The Standard & Poor’s 500 Index climbed 2 percent, the most since Oct. 27, to 1,263.85 at the close in New York.
Estimates of the 67 economists surveyed by Bloomberg for the confidence measure ranged from 58 to 68. The index averaged 89 in the five years leading up to the recession that began in December 2007 and ended in June 2009.
Today’s confidence figures compare with the Bloomberg Consumer Comfort Index, which hovered last week near a record low. The Bloomberg gauge of sentiment, which was at minus 51.6 in the week ended Nov. 6, has held below minus 50 for an unprecedented seven of the past eight weeks.
The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, increased to 76.6, also the highest since June, from 75.1 the prior month.
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, climbed to a five-month high of 56.2 from 51.8.
Recent data have shown the labor market may be starting to stir, while fuel costs are stable. Unemployment unexpectedly fell in October, and jobless claims in the week ended Nov. 5 dropped to the lowest level in seven months, Labor Department figures show.
Gasoline prices have also receded from highs earlier this year. The average cost of a gallon of regular gas at the pump was $3.44 this month through yesterday, about where they were at the end of September, according to AAA, the nation’s largest motoring organization. In May, gas was almost $4 a gallon.
Consumers in today’s confidence report said they expect an inflation rate of 3.2 percent over the next 12 months, the same as in the prior survey.
Over the next five years, the range tracked by Federal Reserve policy makers, Americans expect a 2.6 percent rate of inflation, the slowest since March 2009, after an expectation of 2.7 percent last month.
At the same time, stock prices have fallen after rallying the most since 1991 in October as investors grow concerned that one or more euro nations might default. Wage growth remains sluggish, payroll growth has slowed and home prices have failed to recoup a decrease that began in the middle of 2010.
“There is increasing uncertainty and fear that we may experience another recession,” Salvatore Iannuzzi, chief executive officer of Monster Worldwide Inc., the world’s largest online-recruiting company, said in a call with analysts Oct. 27. “Faced with this heightened lack of confidence, firms around the world are scaling back their hiring plans and more carefully control their spending.”