By Xavier Fontdegloria

Consumer confidence in the U.S. increased in October following three months of declines as concerns over the spread of the Covid-19 Delta variant faded amid falling case counts.

The consumer confidence index increased to 113.8 in October from a revised 109.8 in September, according to data from The Conference Board released Tuesday. The indicator came in above the 108.0 forecast from economists polled by The Wall Street Journal.

The rise in confidence can be attributed to Americans' easing concerns over the Covid-19 Delta variant, said Lynn Franco, senior director of economic indicators at The Conference Board.

Consumer confidence hints Americans' willingness to spend on goods and services, which is a major driver of the U.S. economy. Confidence rose to almost pre-pandemic levels over the spring, but later waned amid the spread of the Delta variant, which has weighed on Americans' mood in the last few months.

The present situation index, which reflects consumers assessment of current business and labor market conditions, rose to 147.4 in October from 144.3 in September. The expectations index, which gauges short-term outlook for income, business and labor market conditions, climbed to 91.3 from 86.7 the previous month.

Short-term inflation concerns rose to a 13-year high, but the impact on confidence was muted, Ms. Franco said.

The proportion of consumers planning to purchase homes, automobiles and major appliances all increased in October, in a sign that consumer spending will continue to support economic growth through the final months of the year, she said. Almost half of the respondents said they planned to take a vacation in the next six months, the highest level since the pandemic hit.

The labor market continues to tighten and consumers are expecting an even better job market and higher incomes than they had since the Delta wave began to gather steam in August, MetLife Investment Management's chief market strategist Drew Matus said.

"Unsurprisingly, with robust labor market expectations, consumers are saying they want to spend again," he said.

Falling Covid-19 cases should be supportive of consumer confidence in the months ahead, but shortages of goods, delivery delays and rising prices into the holidays season could hurt sentiment.

Another consumer sentiment survey carried out by the University of Michigan showed that Americans' sentiment fell in early October. Divergences between both indicators are common as the University of Michigan survey is more focused on consumers' attitudes toward buying conditions, while The Conference Board's survey puts more emphasis on labor-market conditions.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

October 26, 2021 10:48 ET (14:48 GMT)