Confidence among U.S. consumers rose in February to the highest level in a year, showing households may sustain spending and drive the economy.
The Conference Board’s index increased more than forecast, to 70.8 from a revised 61.5 in January, figures from the New York-based private research group showed Feb. 28. Economists predicted the gauge would climb to 63, according to the median estimate in a Bloomberg News survey.
A drop in firings, bigger payroll growth and higher stock prices are supporting consumer sentiment and may spur the spending accounting for about 70 percent of the economy. Americans were more upbeat about job and income prospects in February, helping allay concerns tied to a 44-cent jump in the price of a gallon of gasoline so far this year.
“The consumer feels better,” said Drew Matus, senior U.S. economist at UBS Securities LLC in Stamford, Conn. “Gas prices are certainly a worry for folks, but you don’t want to discount the fact that the labor market continues to have legs.”
Estimates for the Conference Board gauge ranged from 58 to 67.8 in the Bloomberg News survey of 77 economists.
The group’s measure of present conditions increased to 45 from 38.8 in January. The measure of expectations for the next six months climbed to a one-year high of 88 from 76.7.
The Feb. 28 report parallels other data on consumer sentiment. The Bloomberg Consumer Comfort Index climbed to minus 38.4, the highest level this year, in the period ended Feb. 19. The Thomson Reuters/University of Michigan final index of consumer sentiment also rose to a 12-month high of 75.3 in February.
The percent of respondents in the Conference Board survey expecting more jobs to become available in the next six months increased to 18.7 from 16.4 the previous month. The proportion who expect their incomes to rise over the next six months climbed to 15.4 from 13.8 percent in January.
The share of consumers who said jobs are currently hard to get dropped to 38.7 percent, the lowest since November 2008, from 43.3 percent.
Improving job prospects have bolstered household optimism. The unemployment rate declined in January to 8.3 percent, the lowest since February 2009, while the economy generated 243,000 jobs, the most in nine months, data from the Labor Department showed on Feb. 3.
Rising equity values could also make Americans feel more confident. The Dow Jones Industrial Average last week touched the highest level since May 2008.
“The trend has been improving for both U.S. consumer confidence and employment,” Jeffrey Lorberbaum, chairman and chief executive officer of carpet-maker Mohawk Industries Inc., said during a Feb. 24 conference call.
“Consumers are considerably less pessimistic about current business and labor market conditions than they were in January,” Lynn Franco, director of the Conference Board’s Consumer Research Center, said in a statement. “Despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects and their financial situation.” •
Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.