Confidence among U.S. consumers climbed more than forecast in April to a five-month high as Americans’ outlook for the economy and their incomes improved.
The Conference Board’s index rose to 68.1, exceeding the highest projection in a Bloomberg survey, from a revised 61.9 in March, data from the New York-based private research group showed today. Economists surveyed by Bloomberg forecast an increase to 61.
Gains in the stock market, an increase in property values and cheaper prices at the gas pump are helping stabilize household wealth. A growing share of consumers expecting a pickup in incomes may help fuel the pace of spending, which accounts for about 70% of the economy, in the second half of 2013.
“The fact that they feel a little bit wealthier will give them a little more leeway,” said Brian Jones, senior U.S. economist in New York at Societe Generale. Still, “you’re going to have a spring lull, and growth will reaccelerate in the second half of the year. I do think the labor market is genuinely getting better.”
Forecasts of the 72 economists surveyed by Bloomberg ranged from 54.5 to 66.5 after a previously reported 59.7 in March. The measure averaged 53.7 in the recession that ended in June 2009.
Stocks extended losses as a report showed business activity unexpectedly shrank in April for the first time in more than three years. The Standard & Poor’s 500 Index dropped 0.3% to 1,588.38 at 10:21 a.m. in New York.
The MNI Chicago Report’s business barometer fell to 49 in April, the lowest since September 2009, from 52.4 last month. Readings less than 50 signal contraction.
Another report today showed home prices in 20 U.S. cities climbed in the 12 months to February by the most since May 2006. The S&P/Case-Shiller index of property values increased 9.3% from February 2012. Compared with a month earlier, prices rose the most since October 2005.
The Conference Board’s gauge of consumer present conditions rose to 60.4 in April from 59.2 in March. The measure of expectations for the next six months climbed to a five-month high of 73.3 from 63.7.
The share of those expecting their incomes to increase in the next six months advanced to 16.8%, the highest since April 2011, from 14.6%.
Those expecting business conditions to improve in the next six months rose to 16.9% in April from 15% the prior month.
“Consumer confidence has been challenged several times over the past few months by such events as the fiscal cliff, the payroll tax hike and the sequester,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “Thus, while expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend.”
The share of consumers expecting more jobs to become available in the next six months rose to 14.2% in April from 13% in February.
The number of respondents who said jobs are currently plentiful advanced to 9.8% in April from 9.5%.
Today’s figures are in line with the Bloomberg Consumer Comfort Index. That measure in the week ended April 21 was close to the highest since January 2008. At the same time, the Thomson Reuters/University of Michigan index of consumer sentiment fell in April to a three-month low.
Household spending in the first quarter increased at a 3.2% annualized rate, the biggest gain since the fourth quarter of 2010, Commerce Department figures showed April 26. The increase added 2.24 percentage points to economic growth of 2.5% during the three months.
At the same time, a report yesterday showed spending began to cool late in the quarter. Purchases climbed 0.2% in March after a 0.7% surge in the prior month, the Commerce Department said. Economists project outlays in the current quarter will grow at a 1.8% annual rate, according to the median estimate in a Bloomberg survey from April 5 to April 9.
Chipotle Mexican Grill Inc. still sees a lack of consistency from the American consumer.
“It seems like the economy is off to a great start and then every time, about this time every year for the last two years in the spring, we get mixed signals on consumer confidence and job creation and things like that,” Chief Financial Officer John Hartung said in an April 18 conference call.
Hindering households is the 2 percentage-point increase in the tax that funds Social Security, which took effect at the start of the year. Americans earning $50,000 a year are taking home about $80 less a month.