US consumer confidence hits highest level since 2000 in February

US consumer confidence increased in February, according to figures released on Tuesday.

The Conference Board's consumer confidence index rose to 130.8 from 124.3 in January, hitting its highest level since November 2000 and comfortably surpassing expectations for a reading of 126.3.

Meanwhile, the present situation index rose to 162.4 from 154.7 and the expectations index increased to 109.8 this month from 104.0 in January.

Lynn Franco, director of Economic Indicators at the Conference Board, said: "Consumers’ assessment of current conditions was more favourable this month, with the labour force the main driver. Despite the recent stock market volatility, consumers expressed greater optimism about short-term prospects for business and labour market conditions, as well as their financial prospects.

"Overall, consumers remain quite confident that the economy will continue expanding at a strong pace in the months ahead."

Paul Ashworth, chief US economist at Capital Economics, said the surge in the consumer confidence index underlines the fact that household sentiment has not been knocked by the recent bout of stock market volatility.

"Instead, it has continued to strengthen, as households begin to see the recently passed tax cuts show up in their pay cheques."

Ashworth said the increase in the present situation index suggest that the strength of the labour market is also boosting consumer confidence.

"Adding to that evidence, the proportion of respondents saying that jobs are plentiful increased to 39.4%, from 37.2%, while the proportion saying that jobs are hard to get dropped to 14.7%, from 16.3%. The net proportion of respondents saying that jobs are plentiful consequently improved to +24.7, from +20.9, leaving it at a 16-year high and consistent with the current unemployment rate of close to 4%. The net proportion of respondents expecting their incomes to increase rather than decrease also hit a high of 15.2 this month, up from 12.7. Based on the historical relationship that suggests average hourly earnings growth will reach 3.5% by early 2019."