Consumer confidence increased more than forecast in June as Americans grew more optimistic about the economy and the labor market.
The Conference Board’s index advanced to a three-month high of 101.4, exceeding all projections in a Bloomberg survey, from a revised May reading of 94.6, the New York-based private research group’s report showed Tuesday. The Bloomberg survey called for an increase to 97.4.
Hiring gains, stable prices at the gas pump and a pickup in wages are making households feel better about their financial situations. More confidence may help extend the recent rebound in spending and propel the world’s largest economy as global markets struggle to improve.
“This is very encouraging because we very much need a strong consumer to carry this economy, at least in the near-term,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, whose forecast for 100 was among the closest in the Bloomberg survey. “We need a strong consumer to offset some of these drags emanating from abroad.”
The gauge matched March as the second-highest level of sentiment since August 2007. Estimates in the Bloomberg survey ranged from 94.5 to 100.6 after a previously reported May reading of 95.4.
Another report showed home prices in 20 U.S. cities rose at a slower pace than projected in April. The S&P/Case-Shiller index of property values climbed 4.9 percent in the 12 months ended in April after a 5 percent year-over-year gain a month earlier. Nationally, prices were up 4.2 percent.
The Conference Board’s gauge of present conditions increased to 111.6 in June, the strongest in four months, from 107.1. The share of Americans who said business conditions were good increased to a three-month high of 26.4 percent from 24.7 percent.
The index of consumer expectations for the next six months climbed to 94.6 from 86.2 in May.
The Conference Board’s data showed Americans’ assessments of current and future labor-market conditions improved. The share of Americans who said jobs were plentiful increased to 21.4 percent in June, the highest since February 2008, from 20.6 percent.
The proportion of consumers expecting more jobs to become available in the next six months climbed to 17.8 percent from 14.7 percent in May.
Income expectations held steady in June. The share of respondents who expect incomes to climb in the next six months was little changed at 17.5 percent and fewer anticipate a decline.
Other sentiment indexes have turned higher after falling earlier this year. The University of Michigan final reading for June rose to a five-month high as an improving job market boosted Americans’ views about the economy.
The Bloomberg Consumer Comfort Index rose in the week ended June 21 by the most since the beginning of April as survey respondents took a more favorable view of the buying climate and their finances.
Steady job gains that are allowing for a pickup in wages are helping bolster sentiment. Employers added 280,000 jobs in May, the most in five months, and hourly earnings climbed from a year ago by the most since August 2013, a Labor Department report showed on June 5. June payrolls data will be available later this week.
Americans are also seeing prices level off at the gas pump. The nationwide average cost of a gallon of gasoline is holding just under $2.80 after advancing about 40 cents a gallon since early April, according to motoring group AAA.
“Consumers are in considerably better spirits and their renewed optimism could lead to a greater willingness to spend in the near-term,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement.
Cracker Barrel Old Country Store Inc. is among companies seeing the benefits. The restaurant chain said on June 2 that its same-store retail sales climbed 4.5 percent in its fiscal quarter ended May 1.
“The consumer is more confident, is facing lower gasoline prices, (and) a significantly better employment outlook, which is important for our middle-income consumer,” Lawrence Hyatt, chief financial officer, said at a June 23 consumer conference in Boston.