Consumer confidence increased last week to an almost eight-year high as Americans viewed the U.S. economy in a more favorable light and said it was better time to spend.
The Bloomberg Consumer Comfort Index climbed to 47.9 in the period ended April 5, the highest level since May 2007, from 46.2. A measure of buying conditions was the strongest since November 2006, while attitudes about the economy were the brightest in nine weeks.
The pickup in confidence could signal a rebound in demand, fueling an economy that softened in recent months under the strain of harsh winter weather, a strengthening dollar and tepid global growth. Persistent job-market progress and faster wage gains will help to further boost sentiment and spending, which accounts for 70 percent of the economy.
The sentiment index’s “advance is buttressed by other recent indicators, including strong car sales, rising mortgage applications, gains in new- and existing-home sales and a five-month high in manufacturing, even as March jobs data disappointed,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
The increase in the comfort index from a week earlier was the biggest since the end of January. The gauge remains well above last year’s average of 36.7, which was the best since 2007.
The measure of Americans’ views on the current state of the economy climbed to 39.5 last week from 37.1 in the prior period, the report showed Thursday. The buying climate gauge, which measures whether now is a good time to purchase goods and services, advanced to 43.8 from 41.3.
The index of personal finances rose to 60.5, the second-highest level since October 2007, from 60.1.
A strong trend in job growth has probably helped lift sentiment. While March payrolls growth was the weakest since December 2013, employment gains have averaged 260,670 a month for the past year, according to Labor Department data.
Wage growth also may also be showing some signs of life. Average hourly earnings climbed 0.3 percent in March from the month before, compared with a 0.1 percent February gain.
Sentiment last week climbed in six of seven income brackets led by households making $100,000 or more, whose confidence soared to the second-highest level since August 2007. Those making $25,000 to $40,000 were the only households to experience a drop in sentiment.
On a regional basis, confidence improved in all areas except the Midwest. In the South, sentiment was the strongest since September 2007.
The Bloomberg Comfort Index has been presented on a scale of zero to 100 since May 2014, rather than the previous minus 100 to 100, with the midpoint shifting to 50 from zero. The change is also reflected in the gauge’s components. It doesn’t affect the measures’ relationship to each other or their correlation with other economic indicators. Historical data has been revised and analysis of trends, values and other variables also aren’t affected.