Consumer Confidence in U.S. Climbs to a Five-Month High

Confidence among U.S. consumers unexpectedly climbed to a five-month high in January as optimism about the economy and labor market improved.

The Conference Board’s index advanced to 80.7 from a revised 77.5 in December that was weaker than initially estimated, the New York-based private research group reported today. The median forecast in a Bloomberg survey of economists called for a reading of 78.

More Americans than at any time since August 2008 said jobs were currently plentiful and the share of those viewing business conditions as good was the highest in more than six years. Bigger employment gains that lead to more wage growth will help provide a further push for sentiment and drive the consumer purchases that account for almost 70 percent of the economy.

“One would expect an acceleration in spending momentum going into 2014,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, who projected a confidence reading of 80.2. “You’d probably want to see these numbers being sustained over the next few months for you to believe that it will be reflected in spending habits.”

The median projection in a Bloomberg survey of 79 economists called for 78 in the consumer confidence index, little changed from an initial December reading of 78.1. The index averaged 53.7 in the recession that ended in June 2009.

Stocks rose after the report as earnings at companies from Ford Motor Co. to Pfizer Inc. topped estimates. The Standard & Poor’s 500 Index advanced 0.4 percent to 1,788.61 at 11:19 a.m. in New York.

Other Reports

Other reports today showed home prices in 20 U.S. cities rose in November by the most since February 2006 and orders for durable goods unexpectedly slumped last month.

The S&P/Case-Shiller index of property prices in 20 cities climbed 13.7 percent from November 2012 after a 13.6 percent increase in the year ended in October, a report from the group showed today in New York.

Bookings for goods meant to last at least three years dropped 4.3 percent, exceeding the weakest forecast of 82 economists surveyed by Bloomberg, after a 2.6 percent gain in November that was smaller than previously reported, Commerce Department figures showed.

The Conference Board’s present conditions barometer increased to 79.1, the highest since April 2008, from 75.3. Consumers’ assessments of current labor-market conditions improved. The share of respondents who said jobs were hard to get eased this month to 32.6 percent from 32.9 percent.

Labor Differential

The difference between those who said jobs were hard to get and respondents who said employment opportunities were plentiful was the smallest since September 2008.

The Conference Board’s measure of consumer expectations for the next six months rose to a four-month high of 81.8 from 79 a month before. The share of consumers who expected their incomes to increase climbed to 15.8 percent from 13.9 percent. At the same time, the proportion of Americans who said jobs would become more plentiful in the next six months declined.

“Looking ahead six months, consumers expect the economy and their earnings to improve, but were somewhat mixed regarding the outlook for jobs,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up some momentum.”

Today’s figures stood in contrast with other confidence measures. The Thomson Reuters/University of Michigan index unexpectedly declined in January. The Bloomberg Consumer Comfort Index in the week ended Jan. 19 held at a one-month low.

Retail Sales

The gain in the Conference Board’s measure follows reports that consumers were spending at the end of last year. Retail sales rose 0.2 percent as cold weather drove Internet sales and demand for discounted winter clothing after a 0.4 percent advance in November, Commerce Department figures showed Jan. 14. Excluding a drop in auto demand that vehicle makers also partly attributed to the bad weather, sales jumped by the most in almost a year.

“As we start the new year, I’m excited about the opportunities ahead for our country, for our customers and for Wells Fargo,” John Stumpf, chief executive officer at San Francisco-based Wells Fargo & Co., said on a Jan. 14 earnings call. “The unemployment rate has declined, GDP growth accelerated and consumer confidence is near a five-year high.”

The Conference Board’s index climbed in June to 82.1, the highest since January 2008. At 6.7 percent in December, the jobless rate was the lowest in five years, Labor Department figures show.

Some investors this month are feeling the pinch as the stock market retreats. The Standard & Poor’s 500 Index has declined 3.6 percent this year through yesterday.

At the same time, Americans are enjoying cheaper prices at the gas pump. The average cost of a gallon of regular gasoline was $3.28 this weekend, down from $3.33 at the end of last year, according to data from AAA, the nation’s largest motoring organization.

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