Confidence among American consumers climbed in October to a more than four-year high, which may help drive bigger gains in the largest part of the economy.
The Conference Board’s sentiment index increased to 72.2, the highest since February 2008, from a revised 68.4 in September, figures from the New York-based private research group showed today. The figure was projected to rise to 73, according to the median estimate of economists surveyed by Bloomberg.
The percent of respondents who say jobs are currently plentiful rose to the highest level since September 2008, indicating that a decline in joblessness is brightening Americans’ moods. Lower gasoline prices and a budding housing recovery are also contributing to the improvement in confidence.
“The lower unemployment rate and firming of housing prices has made consumers feel a little bit more confident,” Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, said before the report. “Household net worth is slowly but surely rebounding, particularly with house prices starting to go up. So that may be making consumers feel a little bit more confident about taking on bigger ticket expenditures.”
Other reports today showed that initial claims for unemployment benefits declined more than forecast last week and companies expanded payrolls in October by the most in eight months.
Applications for jobless benefits fell 9,000 to 363,000 in the week ended Oct. 27, the fewest in three weeks, the Labor Department reported. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.
Companies added 158,000 workers to payrolls last month after a revised 114,000 gain in September, data from Roseland, New Jersey-based ADP Research Institute showed today. This is the first ADP report derived using a larger sample and new methodology.
The Bloomberg Consumer Comfort Index held near a six-month high as U.S. households became less pessimistic about the state of the economy, a separate report showed today. The index was minus 34.7 in the period ended Oct. 28 after improving the previous week to minus 34.6, the highest since mid-April.
The Conference Board’s measure of present conditions increased to 56.2 from 48.7 in September. The measure of expectations for the next six months increased to 82.9 from 81.5. Estimates for the Conference Board gauge ranged from 65 to 76, according to a survey of 79 economists.
The percent of respondents in the Conference Board survey saying jobs are plentiful climbed to 10.3 from 8.1. The proportion of consumers who expect their incomes to rise over the next six months climbed to 16.7 from 15.9 in September.
Housing’s recovery is brightening moods. Home prices rose 2 percent from a year earlier, the biggest 12-month gain since July 2010, according to S&P/Case-Shiller data released on Oct. 30.
“More Americans are employed, consumer confidence has picked up, inventory levels are healthy and affordability remains attractive,” Scott Stowell, president and chief executive officer of Irvine, California-based homebuilder Standard Pacific Corp., said on an Oct. 26 earnings teleconference. “With that backdrop, we remain focused on our growth strategy and are particularly pleased with the progress we’ve made.”
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