The pickup in hiring is doing wonders for Americans’ economic mood.
The Conference Board’s consumer confidence index advanced to 101.4 in June, matching the second-highest level in almost eight years, the New York-based private research group said Tuesday. The reading exceeded all forecasts in a Bloomberg survey of 75 economists.
Households are feeling upbeat about employment prospects as more respondents than at any time since early 2008 said jobs were plentiful, raising the odds that the pickup in spending that began in May can be sustained. That would probably be enough to power the world’s largest economy past any global disruptions caused by a meltdown in Greece.
“This is very encouraging because we very much need a strong consumer to carry this economy,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York, who projected the index would climb to 100. “We need a strong consumer to offset some of these drags emanating from abroad.”
The confidence gauge matched the March reading as the second-highest since August 2007. The measure averaged 96.9 during the last expansion and 53.7 during the recession that ended June 2009.
Stocks advanced, with the Standard & Poor’s 500 Index climbing 0.3 percent to 2,063.11 at the close in New York. It closed down 0.2 percent for the quarter, breaking a string of nine straight gains, as the prospects of higher interest and Greece’s travails restrained the market.
The Bloomberg survey of economists projected an increase to 97.4, according to the median forecast. Estimates ranged from 94.5 to 100.6. The May reading was revised to 94.6 from a previously reported 95.4.
Hiring gains, stable prices at the gas pump and a pickup in wages are making households feel better about their financial situations as the Conference Board’s present conditions index firmed to a four-month high. The share of Americans who said jobs were plentiful increased in June to the highest since February 2008.
“People see the labor market continuing to improve,” said Markowska. “The fact that gas prices are remaining low gives people confidence that it’s been more of a persistent decline, but I think it’s largely driven by the labor market.”
A report on Thursday is projected to show employers added 230,000 workers to payrolls in June following an increase of 280,000 the prior month, according to the median forecast of economists surveyed by Bloomberg ahead of the Labor Department’s report. In May, hourly earnings climbed from a year earlier by the most since August 2013, according to the agency’s figures.
Other sentiment indexes have turned higher after falling earlier this year. The University of Michigan’s 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.
More confidence may help extend the recent rebound in spending as global markets struggle to improve.
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.
Another report Tuesday showed housing data are still shaking off the effects of the cold winter. Home prices in 20 U.S. cities rose 4.9 percent in the 12 months ended in April after a 5 percent year-over-year gain a month earlier, according to figures from S&P/Case-Shiller.
The index is based on a three-month average, which means the April numbers also were influenced by transactions in March and February, when bitter cold temperatures slowed sales.
“The underlying trend is much stronger than this report seems to suggest, and with sales rising amid very tight inventory we have to expect faster increases again once the weather hit washes fully through the data,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd. in Newcastle, U.K., said in a research note. “Everything else we see in the housing data looks good.”
Lastly, another report indicated manufacturing in the Midwest is still struggling. While the Institute for Supply Management-Chicago Inc.’s business barometer rose to 49.4 this month from 46.2 in May, readings lower than 50 indicate contraction.
The figures showed orders grew this month, while factory employment contracted at a faster pace.