A report released by the Conference Board on Tuesday showed another substantial improvement in U.S. consumer confidence in the month of May.
The Conference Board said its consumer confidence index surged up to 134.1 in May after jumping to 129.2 in April. Economists had expected the index to inch up to 129.8.
“Consumer Confidence posted another gain in May and is now back to levels seen last Fall when the Index was hovering near 18-year highs,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.
The bigger than expected spike by the headline index was partly due to a sharp increase by the present situation index, which shot up 175.2 in May from 169.0 in April.
Consumers saying current business conditions are “good” crept up to 38.3 percent in May from 37.6 percent in April, while those saying conditions are “bad” edged down to 10.2 percent from 11.3 percent.
Franco said the jump by the present situation index was primarily driven by employment gains, as consumers saying jobs are “plentiful” inched up to 47.2 percent from 46.5 percent and those claiming jobs are “hard to get” dropped to 10.9 percent from 13.3 percent.
The report said the expectations index also climbed to 106.6 in May from 102.7 in April, as consumers expressed greater optimism about the short-term outlook.
The percentage of consumers expecting business conditions will be better six months from now rose to 21.9 percent from 19.4 percent, while those expecting conditions will worsen edged down to 8.4 percent from 9.0 percent.
Consumers’ outlook for the labor market was also more favorable, as those expecting more jobs in the months ahead increased to 19.2 percent from 16.7 percent and those anticipating fewer jobs slipped to 12.5 percent from 13.2 percent.
“Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead,” Franco said.
On Friday, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of May.
The consumer sentiment index for May is expected to be downwardly revised to 101.3 from the preliminary reading of 102.4, which was up sharply from 97.2 in April.
Surveys of Consumers chief economist Richard Curtin noted the preliminary data was recorded mostly before U.S.-China trade talks collapsed and China responded with their own tariffs.
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