Consumer confidence in U.S. improved by much more than anticipated in the month of May, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rising to its highest level in over five years.
The Conference Board said its consumer confidence index jumped to 76.2 in May from an upwardly revised 69.0 in April. Economists had expected the index to climb to 71.5 from the 68.1 originally reported for the previous month.
With the bigger than expected increase, the consumer confidence index reached its highest level since hitting 76.4 in February of 2008.
"Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll-tax hike, and sequester," said Lynn Franco, Director of Economic Indicators at the Conference Board.
The report showed that the present situation index climbed to 66.7 in May from 61.0 in April, reflecting an improvement in consumers' appraisal of present-day conditions.
Consumers saying current business conditions are "good" rose to 18.8 percent from 17.5 percent, while those saying conditions are "bad" fell to 26.0 percent from 27.6 percent.
The assessment of the labor market also improved, with consumers saying jobs are "plentiful" inching up to 10.8 percent from 9.7 percent, while those saying jobs are "hard to get" edged down to 36.1 percent from 36.9 percent.
The Conference Board noted that consumers were also considerably more optimistic about the short-term outlook, driving the expectations index up to 82.4 in May from 74.3 in April.
Consumers expecting business conditions to improve over the next six months climbed to 19.2 percent from 17.2 percent, while those expecting conditions to worsen dipped to 12.1 percent from 14.8 percent.
The report said the outlook for the labor market was also more upbeat, with consumers expecting more jobs in the months ahead rising to 16.8 percent from 14.3 percent, while those expecting fewer jobs fell to 19.7 percent from 21.8 percent.
Friday morning, Thomson Reuters and the University of Michigan are due to release their final report on consumer sentiment in the month of May.
The report will provide any necessary revisions to the preliminary reading on the consumer sentiment index for May, which came in at 83.7 compared to the final April reading of 76.4.
With the sharp jump, the preliminary reading on the index came in well above economist estimates for a reading of 78.0 and reached its highest level since July of 2007.
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