Consumer sentiment climbed more than forecast in November as Americans took heart in lower interest rates and store discounts.
The University of Michigan’s preliminary consumer sentiment index for this month rose to 93.1, a four-month high, from 90 in October, a report showed Friday. The median projection in a Bloomberg survey called for a reading of 91.5.
The gain in confidence was propelled by those in the bottom two-thirds of the pay scale as a firming job market and cheap fuel costs made for the most-favorable income expectations in almost nine years. That bodes well for the holiday-shopping season after retail sales were weaker than projected last month.
“Confidence rose in early November mainly due to a stronger outlook for the domestic economy,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. “Buying plans remained very favorable in early November due to low prices and currently low interest rates.”
Estimates of the 66 economists in the Bloomberg survey ranged from 88 to 94. The gauge this month matched the 2015 average through October, which is on track to be the highest since 2004, Curtin said in the statement.
The Michigan sentiment survey’s index of expectations six months from now increased to 85.6, a five-month high, from 82.1 in October. The gauge of current conditions, which measures Americans’ views of their personal finances, rose to 104.8, the highest since August, from 102.3 last month.
Americans expected an inflation rate of 2.5 percent in the next year compared with 2.7 percent in October. Over the next five to ten years, they expected prices would also rise 2.5 percent, matching the lowest in monthly data going back to 1979.