Economic Report: Consumer confidence hits 6-month high despite China trade tensions, costlier gas

Consumer confidence surged in May to a six-month high. Shoppers try on sunglasses at a store in New York.

The numbers: Consumer confidence surged in May to a six-month high, spurred by a strong labor market, a new survey showed. Higher gas prices and a flareup in trade tensions with China appeared to do little to dampen the optimism of Americans.

The consumer confidence index climbed to 134.1 from 129.2 in April, the Conference Board said Tuesday.

What happened: The present situation index — or how Americans view the economy right now — rose to a 18-and-a-half-year high of 175.2. The last time the index was higher was in December 2000.

The future expectations index moved up to 106.6 from 102.7.

Big picture: The U.S. labor market has shown remarkable resilience in the past year, with companies continuing to add jobs despite somewhat slower growth at home and abroad. A robust jobs market is likely to fuel more consumer spending and keep the economy expanding at a stable pace.

What they are saying? “Consumers expect the economy to continue growing at a solid pace in the short-term,” said Lynn Franco, director of economic indicators at board, “And despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”

Market reaction: The Dow Jones Industrial Average

DJIA, +0.27%

and S&P 500

SPX, +0.25%

rose in Tuesday trades.

The 10-year Treasury yield

TMUBMUSD10Y, -1.32%

slipped to 2.29%. The yield has sunk from a seven-year high of 3.23% last October, and it’s been under pressure lately from a flareup in trade tensions between the U.S. and China.