The Conference Board said its index of consumer confidence rose to 93.2 in May from a revised 93.0 in April. Analysts anticipated a reading of 93.5.
"The recent upturn in the present situation index is being spurred by strong employment gains in March and April," said Lynn Franco, director of the Board's consumer research center. "This has made consumers more positive about short-term prospects in the months ahead. The pick-up in the job market is offsetting the impact of rising gas prices and escalating tensions overseas."
Record high oil prices have fueled concern that inflation could take off sharply as the cost of gasoline rises and consequently inhibit U.S. economic growth. Some economists had feared that the scandal over prisoner abuse at the hands of U.S. soldiers in Iraq and the subsequent backlash could weigh on confidence, but this turned out not to be the case.