Consumer confidence jumped to its highest level in two years in June, buoyed by an improved job outlook, the New York-based Conference Board (search) reported Tuesday.

The Consumer Confidence Index increased nearly 9 points to 101.9, up from a revised reading of 93.1 in May. The latest reading was much better than the 95 that analysts had expected.

Lynn Franco, director of The Conference Board's Consumer Research Center, said the strong improvement in current business conditions propelled consumer confidence to the highest level since June 2002, when the indicator was 106.3.

The Present Situation index is now 104.8, up from 90.5 in May. The Expectations Index, which measures consumers' outlook over the next six months, rose to 100 from 94.8.

"Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs," Franco said. "And, with prices at the pump beginning to ease, the short-term outlook remains favorable."

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

The news about consumer confidence was encouraging given that June is turning out to be a weak month for retail sales. Both Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) cut their sales forecast for June because of unseasonably cool weather.

Mark Vitner, economist at Wachovia Corp., suspects that higher gasoline prices also dampened spending, but he said he believes the blip is "only temporary."

"If gasoline prices keep coming down over the summer, then the damage is limited," he said. If gas prices don't continue to decrease, Vitner believes there will be an impact on consumer spending in 2005.

Nevertheless, Vitner feels encouraged by consumer's opinion of current business conditions. "Things are clearly getting better," he said.

Consumers' assessment of current business conditions improved considerably in June. Those saying conditions are "good" rose to 25.6 percent, up from 22.2 percent.

Those saying conditions have worsened fell to 17.5 percent from 21.6 percent. Consumers claiming jobs are "hard to get" decreased to 26.5 percent from 30.3 percent. Those saying jobs are "plentiful" rose to 18.0 percent from 16.6 percent.

Consumers are more optimistic about the short-term future. Those expecting business conditions to improve in the next six months rose to 23.4 percent from 22.8 percent. Consumers expecting conditions to worsen declined to 9.2 percent from 10.1 percent.

The employment outlook remained upbeat. Those anticipating more jobs to become available increased to 19.7 percent from 18.7 percent. Those expecting fewer jobs edged down to 17.1 percent from 17.3 percent. The proportion of consumers anticipating an increase in their incomes rose to 19.3 percent, up from 17.1 percent last month.

The news comes as the Labor Department (search) is set to release its job figures on Friday. Analysts expect the unemployment rate to remain at 5.6 percent. But they are counting on nonfarm payrolls — government and private employers — to add 250,000 jobs.

The upbeat consumer confidence report propelled stocks higher Tuesday.