WASHINGTON — A flurry of reports Thursday showed that U.S. consumers are growing more confident and spending more, boosting a still-weak economy just five days before the presidential election.
Consumer confidence surged in October to its highest level in nearly five years. Americans were encouraged by recent declines in the unemployment rate. And they responded by spending more on cars and trucks, at retail businesses and on goods produced at U.S. factories.
Still, businesses remain nervous about where the economy is headed and that could weigh on hiring. The October jobs report, to be released today, is expected to show another month of tepid job growth.
"While short of any glowing upside surprises … U.S. economic data are at least all moving in the right direction," Robert Kavcic, an economist at BMO capital Markets, said in note to clients.
Thursday's reports showed:
• The Conference Board's consumer confidence index rose to 72.2 last month. That's the highest reading since February 2008. While the index is still below the 90 reading consistent with a healthy economy, it has risen from a reading of 40.9 a year ago. That's the biggest one-year increase since 1994, Kavcic said.
• Sales in retail stores open at least a year rose 5 percent in October, according to a tally of 21 retail chains by the International Council of Shopping Centers. Some of that increase may reflect higher spending for generators, batteries, water and other supplies in preparation for Hurricane Sandy.
• Manufacturing expanded for the second straight month, largely because of higher consumer demand. The Institute for Supply Management, a private trade group, said its index of factory activity ticked up to 51.7 in October from 51.5. A reading above 50 indicates expansion.
• Weekly unemployment applications fell 9,000 to 363,000 last week.
• A report by payroll provider ADP showed that businesses added 158,000 jobs in October, up from 114,000 in September.
• Auto sales also rose in October, even though the storm caused dealers on the East Coast to lose three days of business. Toyota's sales rose almost 16 percent, Chrysler's were up 10 percent and General Motors' bumped up 5 percent. Ford's sales increased only slightly.
• Construction spending rose 0.6 percent in September, the Commerce Department said. A healthy gain in spending on home construction and renovation outpaced declines in commercial and government building.
The U.S. economy expanded at a 2 percent annual pace in the July-September quarter, up from 1.3 percent in the second quarter. Most economists expect growth may slow a bit in the fourth quarter, partly because of disruptions from Hurricane Sandy.
Still, the economy is growing too slowly to rapidly bring relief to roughly 12 million out-of-work Americans. With the unemployment rate still high, steady growth of more than 3 percent is generally needed to create a sufficient number of jobs.