Consumer sentiment advanced last week to the highest level since April as Americans’ attitudes about their finances and the buying climate brightened further.
The Bloomberg Consumer Comfort Index increased by 1.4 points to 44 in the period ended June 28. In the past three weeks, the gauge has recouped half of its 7.8 point decline from an eight-year high in mid-April.
“Its recent track has correlated very closely with gasoline prices, now easing after a sharp springtime run-up,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.
Prices at the gas pump have ebbed after advancing about 40 cents a gallon from early April to mid-June, contributing to the biggest two-week improvement in buying attitudes in more than three years. Stronger employment growth, a pickup in incomes and rising home prices are keeping households more upbeat about their finances and the economy.
The comfort index’s buying climate gauge, which measures whether now is a good time to purchase goods and services, increased this week to 38.9 from 37. The 4.7 point gain in the past two weeks is the biggest since March 2012.
Part of the reason for the increase is explained by stable fuel costs. The nationwide average price of a gallon of gasoline is holding below $2.80, based on data from the auto group AAA.
The gauge of personal finances climbed to 58.6, the highest since early April, from 56.4. A measure of consumers’ views on the current state of the economy improved to 34.6 from 34.3 the prior week.
Confidence among homeowners rose last week, ending the second quarter with the biggest one-month increase since records began in 1990. The housing market is gaining momentum, with sales of previously owned and new homes climbing in May.
Wealthier Americans were even more upbeat last week. Comfort among those earning more than $100,000 a year increased to the highest level since early May. In June, the gauge climbed 13.1 points, the biggest one-month jump in eight years.
Nonetheless, recent stock market volatility stemming from concerns over the Greek debt crisis could present a challenge, Langer said. Historically, the comfort index has correlated closely with the Dow Jones Industrial Average, which has declined this week.
Sentiment improved in five of seven major income groups last week as better job prospects brightened outlooks among full-time and part-time workers.
By region, comfort climbed in the Northeast by the most since December, and rose for a third week in the Midwest. Sentiment also increased in the West.
The Bloomberg Comfort Index, presented on a scale of zero to 100, is a four-week rolling average and based on a national sample of 1,000 adults. The report’s gauges have a margin of error of plus or minus 3.5 points.