The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence for May rose to 67.9 from 65.1 in April. This was above economists' median expectation of a reading of 67.0, according to a Reuters poll.
The index of consumer expectations jumped to 69.0 in early May, its highest since October 2007 and up from 63.1 in April.
Consumer confidence rose in early May as consumers became increasingly convinced that the economy is in its final stages of contraction, and paradoxically, that their personal finances would remain dismal and keep their spending at reduced levels for the foreseeable future, the Reuters/University of Michigan Surveys of Consumers said in a statement.
Confidence remained shaky overall however, with the majority of consumers in early May reporting their financial situation had worsened due primarily to income declines, shorter work hours and lost jobs, according to the survey.
The gauge of current economic conditions eased in early May to 66.2 from 68.3 in April.
Yes we are still in a recession, but we may be in the stage of pre-recovery, said Andrew Richman, fixed income strategist at SunTrust Private Wealth Management in Palm Beach, Florida.
U.S. Treasuries were largely unmoved by the data, trading steady at lower levels while the Dow and NASDAQ stock indexes added to gains.
(Additional reporting by Richard Leong; Editing by Chizu Nomiyama)