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Consumer confidence rose for the ninth consecutive month in May on more favorable job and wage prospects, rising to its highest level since October 2007.

The Thomson Reuters/University of Michigan Index of Consumer Sentiment improved to 79.3 in May up 3.8% from April’s reading and 6.7% above last May. The Current Conditions Index rose 5.2% to 87.2 from 82.9 the prior month, the highest since January 2008 and 6.5% higher than last year. The Expectations Index increased to 74.3 from 72.3 in April, the highest since July 2007 and 6.9% higher than a year ago.

Surveys of Consumers chief economist, Richard Curtin, said “Consumer confidence was nearly as high in the past two years before the gains were reversed. While gas prices and economic policy debates played a role in the pullbacks, changes in job expectations also had a critical impact. The upbeat consumer reports on jobs could mean that more positive numbers will soon be reported by the government, or that consumers have yet again pushed their expectations beyond the likely performance of the economy. The most likely prospect is that job growth resumes at a modest pace and that confidence re-mains largely unchanged until after the November election and decisions about tax policy are made.”

Many more consumers reported hearing about recent job gains than job losses. Indeed, the fewest consumers reported hearing of job losses in May than anytime since mid 2007. In each of the past three months, a majority of consumers reported an improved economy, and twice as many expected further improvement rather than renewed declines in the year ahead. Most consumers, however, expected the gains to be modest. Confidence in the government’s economic policies remained relatively low, with 41% holding negative views.

Favorable views on buying conditions for household durables were cited by 63% in May, the highest level in more than a year, driven up by the availability of price discounts. Vehicle buying conditions were judged more favorably in May by households with incomes over $75k, those most likely to purchase new vehicles. Favorable views of vehicle buying conditions were held by 72%, up from 67% one month ago and 57% one year ago.