US consumer sentiment rose to its highest level in more than four years in early May as US citizens were upbeat about the job market and buying plans improved, a survey showed on Friday, offering signs of an economic recovery.
Separate data earlier in the day showed US producer prices unexpectedly fell in April as energy costs dropped the most in six months, a sign of easing inflation pressures that could give the Federal Reserve more room to help the economy should growth weaken.
The Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in April, topping forecasts for a small decline to 76.2.
It was the highest level since January 2008.
Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses, the survey said.
Even so, consumers were only slightly more optimistic about declines in the unemployment rate than they were a year ago, with only one in four expecting it to fall in the year ahead.
Employers cut back on hiring in April and March after an acceleration at the start of the year. April’s unemployment rate eased to 8.1 percent as more people dropped out of the work force.
In a potential harbinger of increased spending, consumers’ buying plans for vehicles and durable goods improved at the beginning of the month, with 65 percent saying buying conditions were favorable, the highest level in more than a year.
“Households are feeling more comfortable. It’s pretty good news for consumer spending,” said Gus Faucher, senior macroeconomist at PNC Financial Services in Pittsburgh.
After a run-up at the start of the year, gasoline prices have pulled back in recent weeks, providing more breathing room for stretched consumers, and the survey found no further gains in prices were expected in the year ahead.
Survey director Richard Curtin said that while the lower gasoline prices are good news for consumers, he expects the sentiment index will likely be stuck around current levels until the US presidential election in November.