Consumer confidence scaled a one-year high in February as optimism about the labor market offset concerns over rising gasoline prices, an independent survey showed on Tuesday. The Conference Board said its index of consumer attitudes increased to 70.8 this month, the highest reading since February last year, from an upwardly revised 61.5 in January.
Economists polled by Reuters had forecast the index rising to 63.0 from a previously reported reading of 61.1 in January. "Consumers are considerably less pessimistic about current business and labor market conditions than they were in January," said Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "And, despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects and their financial situation."
Gasoline prices have risen 12.6 percent or 42 cents since the start of the year and averaged $3.78 a gallon in the week through Monday, according to the Energy Information Agency. U.S. stocks gained on the data, while the dollar rose against the yen. Treasury debt prices trimmed gains.
"The big question is how will consumers respond to higher energy and gasoline prices. The recent increases did not find their way into this, so it will be interesting to see how they will respond in the months ahead," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
Rising gasoline prices helped to almost snuff out growth early last year, but economists believe the impact on households this time around could be mitigated somewhat by weak costs for natural gas and a strengthening labor market. And consumers are beginning to believe in an improving labor environment, with their assessment of the labor market brightening a notch this month.
About 38.7 percent of respondents in the Conference Board survey said jobs were hard to get this month, down from 43.3 percent in January. The share of consumers viewing jobs as plentiful rose to 6.6 percent from 6.2 percent the prior month. The jobs market has enjoyed two straight months of solid job growth, with the unemployment rate falling to a three-year low of 8.3 percent in January. With the labor market firming, consumers grew more optimistic about their finances. About 15.4 percent of those surveyed this month expected their incomes to increase, up from 13.8 percent in January.
Despite rising gas prices at the pump, consumers' inflation expectations in the coming 12 months were unchanged at 5.5 percent.
(Reporting By Lucia Mutikani)
