Confidence among American consumers rose more than forecast in September to a seven-month high, which may help support the largest part of the economy.
The Conference Board’s index increased to 70.3 this month from 61.3 in August, figures from the New York-based private research group showed today. The September figure exceeded the most optimistic projection of economists, whose median estimate in a Bloomberg survey called for 63.1.
Rising home values and higher stock prices are helping bolster sentiment, which may encourage households to boost the spending that accounts for about 70 percent of the economy. At the same time, a jobless rate in excess of 8 percent and limited wage gains are acting as restraints.
“We can expect a slow and steady increase in confidence,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “The turn in housing is huge. Stock market gains are also significant. These two factors indicate improvement in net worth that’s really making people feel better about their finances.”
Americans became more optimistic about the prospects for employment, business conditions and incomes this month, today’s report showed.
Stocks extended gains after the figures, with the Standard & Poor’s 500 Index advancing 0.2 percent to 1,460.71 at 10:04 a.m. in New York. The yield on the benchmark 10-year Treasury note was little changed at 1.71 percent.
Estimates for the Conference Board gauge ranged from 60 to 70 in the Bloomberg survey of 73 economists.
The group’s measure of present conditions increased to a five-month high of 50.2 from 46.5 in August. The measure of expectations for the next six months advanced to 83.7, the highest since February, from 71.1.
The percent of respondents in the Conference Board survey expecting more jobs to become available in the next six months climbed to 18.5, the highest since February, from 15.8 the previous month. The proportion of consumers who expect their incomes to rise over the next six months rose to 16.3, the highest this year, from 16 percent in August.
Today’s report parallels strength exhibited by other indicators of consumer sentiment. The Bloomberg Consumer Comfort Index climbed to a seven-week high in the period ended Sept. 16. The Thomson Reuters/University of Michigan preliminary index of sentiment rose this month to the highest level since May.
Brightening household moods, the S&P 500 has gained 16 percent this year through yesterday.
Home prices in July rose 1.2 percent from a year earlier, the biggest 12-month increase since August 2010, according to S&P/Case-Shiller data released earlier. Property values in July were up 0.4 percent from the previous month.
Still, consumers’ outlooks may be darkened by unemployment stuck above 8 percent for 43 straight months, the longest stretch in records dating back to 1948, according to the Labor Department.
Rising optimism would help promote more household spending, supporting the economy at a time when manufacturing and exports are starting to cool. Consumer purchases grew at a 1.7 percent annual rate in the second quarter, down from a 2.4 percent rate in the previous three months, Commerce Department data show.
“The economy is still pretty sluggish with unemployment where it is and with consumer confidence where it is,” Tom Folliard, president and chief executive officer of CarMax Inc., a Richmond, Virginia-based used-vehicle retailer, said during a Sept. 20 earnings call. “I still think we have that kind of the economy hanging over our customer traffic.”