Consumer confidence rose last week to the highest mark in more than five years as Americans' views on personal finances, spending and the economy improved.
The Bloomberg Consumer Comfort Index rose to minus 23.5 for the period ended Aug. 4, its strongest reading since January 2008, from minus 27 a week earlier. All income groups save one staged gains, with the biggest advances coming at the lower end of the pay scale.
The broadening of the increases to include those with the smallest paychecks signals the job market is thawing for a bigger share of households, which will help put spending on sounder footing. Nonetheless, even faster job and income growth will be needed to encourage a pickup in consumer purchases after a second-quarter slowdown.
The fewest workers applied for unemployment benefits in the past month since before the last recession. Claims in the four weeks ended Aug. 3 fell to 335,500 on average, the lowest number since November 2007, a Labor Department report showed. Claims rose to 333,000 last week, in line with the median projection in a Bloomberg survey, from 328,000 the prior week.
Labor Department data last week showed unsteady improvement in the job market as employers added fewer workers than forecast in July, while the jobless rate fell to a four-year low as more Americans found part-time positions. Payrolls rose by 162,000, the least in four months, and unemployment fell to 7.4% from 7.6%.
It shouldnt be surprising that people are feeling more upbeat and confident, particularly with respect to their financial conditions, said Richard Yamarone, a senior economist at Bloomberg LP in New York. At the same time, the recent pace of consumer spending indicates a steady-as-she-goes environment for the economy.
The Bloomberg comfort index has foreshadowed changes in other measures. The Thomson Reuters/University of Michigan final index of consumer sentiment rose in July to its highest level in six years, a report showed on July 26.
Meanwhile, historically low borrowing costs are supporting homes sales and boosting property values. The S&P/Case-Shiller index of home prices in 20 U.S. cities climbed 12.2% in May from the same time last year, the biggest 12-month gain since March 2006, a report showed last month.