Before the holiday shopping season begins in earnest, U.S. consumer sentiment climbed to a five-month high, according to a Thomson Reuters/University of Michigan survey released Friday.
The preliminary sentiment index rose to 69.3 for November, mirroring economists’ expectations for a level of 69.0 in a Reuters poll.
Up from a reading of 67.7 in October and at its highest point since June, sentiment was helped by an improved outlook for jobs and wages as well as early holiday sales. Consumer sentiment averaged 88.9 in the five years before late 2007, when the recession began.
“Overall, confidence is still very weak but it is at least heading in the right direction,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note.
A Bloomberg report noted that growing confidence raises the odds that retailers such as Macy’s and Wal-Mart will see sales climb during the busy shopping and hiring holiday season. The Reuters/Michigan report “also signals the end of political campaigning following the Nov. 2 election may be helping dispel pessimism over the economic outlook,” Bloomberg said.
Both the current conditions and expectations components also rose. The current conditions index increased 3.1 points to 79.7, short of its June high, 85.6. Expectations increased just 0.8 point.
"This is disappointing, because the index is sensitive to movements in the stock market and we had expected the rebound of recent months to be reflected in the index,” Shepherdson said. “It was close to 70 before the impact of the spring rollover in stocks hit. Still, we view this as a delay rather than a cancellation of the recovery in expectations, and we look for stronger numbers next month.”
Read about the Oct. 29 consumer sentiment index at AdvisorOne.com.