The Conference Board’s index climbed to 94.5 this month, the highest since October 2007, from a September reading of 89 that was stronger than initially estimated, the New York-based private research group said today. The median forecast of economists surveyed by Bloomberg projected a reading of 87.
More job security, declining gasoline prices, and a strengthening labor market are setting the stage for a stronger expansion. Bigger wage increases and a reduction in long-term unemployment would help keep sentiment improving and lay the groundwork for gains in spending, which makes up almost 70 percent of the economy.
“The consumer really has the wind at their backs,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “The consumer at this point seems to have the wherewithal to power the economy forward.”
Among other reports today, home prices rose in the 12 months ended in August at the slowest pace since November 2012. The S&P/Case-Shiller (SPCS20Y%) index of property prices in 20 U.S. cities climbed 5.6 percent from the same month last year. Nationally, prices increased 5.1 percent.
Orders for durable goods dropped unexpectedly in September on waning demand for machinery and computers, figures from the Commerce Department showed. Bookings for goods meant to last at least three years decreased 1.3 percent after declining 18.3 percent in August. The median forecast of 83 economists surveyed by Bloomberg called for a 0.5 percent gain.
Estimates for consumer confidence in the Bloomberg survey of 77 economists ranged from 82 to 91.5 after a previously reported September reading of 86. The Conference Board’s measure averaged 96.8 during the last expansion and 53.7 during the recession that ended in June 2009.
The Conference Board’s gauge of consumer expectations barometer for the next six months jumped to 95 from 86.4. The index of present conditions rose to 93.7 from September’s 93.
Today’s report corroborates other readings on sentiment. The Thomson Reuters/University of Michigan preliminary October gauge also climbed to the highest level in seven years, while the weekly Bloomberg Consumer Comfort Index (COMFCOMF) recently matched the second-highest level since August 2013.
The Conference Board’s data showed Americans’ assessments of current and future labor-market conditions improved. The share of Americans who said jobs were currently plentiful rose to 16.5 percent from 16.3 percent. The share who said jobs were hard to get fell to 29.1, the lowest since May 2008, from 29.4 in September.
A greater number of consumers expected more jobs to become available in the next six months as the share increased to 16.8 percent from 16 percent.
The share of respondents in the Conference Board’s survey that said they expected their incomes to rise in the next half year climbed to 17.7 percent this month from 16.9 percent in September.
Payrolls climbed 248,000 in September after a 180,000 gain the prior month, figures from the Labor Department showed earlier this month. The unemployment rate dropped to 5.9 percent, the lowest level since July 2008.
Cheaper gasoline prices also put more money in consumers’ wallets. A gallon of regular fuel at the pump cost $3.03 on average yesterday, the lowest since December 2010 and down from a 2014 high of $3.70 in April, based on data from AAA, the largest U.S. motoring group.
Progress in the labor market is keeping Choice Hotels International Inc., which operates the Comfort, Quality, and Sleep Inn motel brands, upbeat about the business.
“The domestic economy continues to gain strength, which we believe should be a positive for the lodging industry,” Stephen P. Joyce, president and chief executive of the Rockville, Maryland-based franchise hotel company, said during an Oct. 24 earnings call. “There have been solid gains recently in household employment in September and some improvements in the labor participation rate.”