WASHINGTON – U.S. consumer confidence rose this month to its highest level in almost five years, helped by a better outlook for hiring over the next six months.
The Conference Board said Tuesday that its consumer confidence index rose to 73.7 in November from 73.1 in October. Both are the best readings since February 2008.
The index is still below the level of 90 that is consistent with a healthy economy. It last reached that point in December 2007, the first month of the Great Recession. But the index has increased from the all-time low of 25.3 touched in February 2009.
Higher consumer confidence could translate into a more robust holiday shopping season and stronger economic growth. Consumer spending drives nearly 70 per cent of economic activity.
The report also supported the findings of a separate survey from the University of Michigan released last week, which showed consumer sentiment at a five-year high. Still, both surveys increased at slower rates than the previous month.
Americans are growing more optimistic because they see the job market getting improving, the Conference Board said. Employers added 171,000 jobs in October and more jobs were created in August and September than first thought.
The Conference Board surveyed approximately 5,000 households in the first two weeks of the month. Those surveyed were asked how they felt about the economy and job market now, as well as where they see both going in six months.
The survey found that most people viewed current conditions the same as in October. But the percentage of Americans who expect more jobs to be available in the next six months rose to 20.3 per cent, from 19.7 per cent in October.
More Americans said they plan to buy a home, an appliance or take a vacation, the survey found. But the percentage expecting to buy a car fell.
Many of the participants in the Michigan survey said they expect the unemployment rate to drop over the next six months. Still, some expressed concerns about the “fiscal cliff,” a package of sharp tax increases and spending cuts that will take effect next year unless Congress and the White House can replace them. The tax increases would leave consumers with much less money to spend.
A better housing market may also be contributing to consumers’ better mood.
Standard & Poor’s/Case-Shiller reported Tuesday that its 20-city index of home prices rose 3 per cent in September compared with the same month last year. Prices also gained 3.6 per cent in the July-September quarter compared with the same quarter in 2011.
Across the U.S., prices increased in 18 of 20 cities over the 12-month period.