The Conference Board’s measure of Consumer Confidence shattered expectations in May, surging beyond all forecasts to a score of 54.9, just more than 14 points higher than April’s upwardly revised 40.8. The score marks the highest level since September.
Analysts were expecting a gain in the month due to the two-month rally in the stock market, but the consensus expectation was only 42.6, with the highest of expectations at 47. In reality, the jump was the biggest one-month climb in almost five years.
Both major components saw a gain this month. The index of present conditions climbed to 28.9 in May, up from 25.5 in April, while the measure of six-month expectations soared to 72.3, the highest level in 16 months.
Prior to the release, analysts at IHS Global Insight said a gain in confidence might not mean much as consumers attempt to restrain spending in light of tight credit, rising unemployment, and a fall in household wealth. A gain of this magnitude could have more optimistic implications, however.
"Consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, director of the Conference Board's Consumer Research Center.
The survey’s employment outlook also saw improvement. Consumers expecting more jobs in the months ahead increased to 20.0% from 14.2%, while those anticipating fewer jobs decreased substantially to 25.2% from 32.5%.
“While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us," Franco concluded.