May 16 (Bloomberg) -- Consumers’ economic outlook improved in May to its best reading in five months, showing Americans are looking beyond the current slowdown to a rebound in growth later this year.
The monthly Bloomberg consumer economic expectations gauge rose to minus 1 from minus 4 in April, a report today showed. The weekly Consumer Comfort Index slipped to minus 30.2 for the period ended May 12 from minus 29.5 the prior week, hovering around a five-year high reached at the end of last month.
Rising home values and stock prices gains may be underpinning expectations and bolstering consumer spending, which accounts for about 70 percent of the economy. Nonetheless, the lagged effect of higher payroll taxes are crimping the discretionary budgets of low- to middle-wage earners, preventing total demand from accelerating.
"It reflects a broader stabilization of the labor market and greater confidence in household economic expectations," said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. "Should consumers continue to demonstrate an increase in confidence, they’ll likely slow the rebuilding of savings and continue to spend a bit more."
A report today from the Labor Department showed more Americans than projected filed applications for unemployment benefits last week. Jobless claims jumped by 32,000 to 360,000 in the week ended May 11, exceeding all forecasts in a Bloomberg survey and the most since the end of March.
The Commerce Department said starts of new homes fell more than forecast in April to a five-month low, indicating a pause in the industry’s progress as builders slowed work on apartments. Starts slumped 16.5 percent, the most since February 2011, to an 853,000 annualized rate. Building permits surged to an almost five-year high.
Stocks declined after the figures. The Standard & Poor’s 500 Index, which extended a record yesterday, decreased 0.1 percent to 1,656.58 at 9:37 a.m. in New York.
One of the three components of the comfort index climbed last week while two fell.
The index measuring consumers’ views on their personal finances climbed to 1.8 from 0.8, the fifth straight positive reading.