June 27 (Bloomberg) -- Consumer sentiment climbed last week to its highest level in more than five years as Americans became more inclined to shop.
The Bloomberg Consumer Comfort Index increased to minus 28.3 in the period ended June 23, its highest level since January 2008, from minus 29.4 a week earlier. A measure of the buying climate rose for a second week.
Rising residential property values and progress in the labor market have spurred demand for housing and automobiles as consumers gain confidence the expansion will be sustained. The figures indicated households are looking past the recent slump in stock prices and jump in borrowing costs as the economy heals and fuel costs retreat.
“The general improvement in economic expectations as households grow more confident in their employment status continues to bolster overall consumer comfort,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Relief in the form of what will likely be falling gasoline prices in coming months should bolster discretionary spending.”
Other reports today showed consumer spending rebounded in May following the biggest drop in more than three years and fewer Americans filed claims for jobless benefits last week.
Household purchases, which account for about 70 percent of the economy, rose 0.3 percent after a 0.3 percent decline the prior month that was the biggest since September 2009, the Commerce Department said. Incomes advanced 0.5 percent, more than projected.
Applications for unemployment insurance payments fell by 9,000 to 346,000 in the week ended June 22, according to figures from the Labor Department. Claims fell to a five-year low of 327,000 in late April.
The Standard & Poor’s 500 Index climbed 0.7 percent to 1,614.77 at 9:40 a.m. in New York. The S&P 500 dropped 2.1 percent last week as Fed policy makers said they may start paring stimulus measures later this year.
The Bloomberg index has foreshadowed changes in other measures. The Conference Board’s index in June rose to its highest level since January 2008, exceeding all forecasts in a Bloomberg survey, a report showed this week.
With the S&P 500 still up 12.4 percent this year through yesterday, higher-income Americans are seeing the biggest improvement in confidence. The index for households earning between $75,000 and $100,000 jumped to 9.6, its highest since November 2007, from 4.8 the week prior. The outlook improved for the second straight week for households earning between $50,000 and $75,000 a year, rising to minus 22.6 from minus 24.4.
The comfort index among consumers with annual incomes of $100,000 or more fell to 14.8 from 18.7 a week earlier, which was the third-highest since November 2007, today’s sentiment data showed.
The advance in the consumer index was driven by a more optimistic view on shopping, with the buying climate index rising to minus 37.4 from minus 40.7 a week earlier as more households said the time was right to purchase things.
A gauge of Americans’ views on personal finances held at 3.8, marking the 11th consecutive week of positive readings. The measure of how Americans view the current state of the economy was little changed at minus 51.3 compared after minus 51.2 a week earlier, which was the highest since January 2008.
The housing market could also be brightening moods. The S&P/Case-Shiller index of property values in 20 cities increased 12.1 percent in April from the same month in 2012, the biggest year-over-year gain since March 2006. Purchases of new homes jumped in May to a five-year high, figures from the Commerce Department showed this week.
The index for renters increased for the sixth straight week to reach minus 36.5, the highest since March 2008, from minus 38.3 a week prior. The outlook among homeowners also increased to minus 24 from minus 24.4. The gauge reached a five-year high of minus 20.7 in mid-May.
Ascena Retail Group Inc., a holding company for five women’s clothing retailers including Justice, Dress Barn and Maurices, is one of the companies counting on confidence continuing to improve.
“We’ve seen a fair amount of consumer confidence in spending on a macro level, so it feels like the economy’s coming back,” David Jaffe, president and chief executive officer of the Suffern, New York-based company, said June 25 at a retail conference. “I feel that it is sustainable.”
Full-time workers were the least pessimistic since November 2007, with their comfort index rising to minus 9.7, the highest level since November 2007, from minus 14.7, today’s report showed.
The improvement in confidence overshadowed some less positive elements of the report. Readings of “poor,” the weakest available to respondents, climbed for all three components -- the economy, personal finances and buying climate -- indicating some consumers weren’t faring as well.
Confidence measures for those making less than $25,000 a year dropped last week.
The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers 18 and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate. The percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.
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