(Bloomberg News) Confidence among consumers rose to an eight-month high in December as an improving job market helped Americans regain all the ground lost following the mid-year government budget battle and credit-rating downgrade.

The Conference Board's index increased to 64.5, exceeding all estimates in a Bloomberg News survey and the highest since April, from a revised 55.2 reading in November, figures from the New York-based private research group showed today. Another report showed home prices fell more than projected in October.

Unemployment that dropped last month to its lowest in more than two years and the cheapest gasoline since February are prompting households to take advantage of discounts during the holiday shopping season. The improvement in sentiment may help sustain household purchases, which account for about 70 percent of the economy, into the new year.

"A large part of the problem in the economy is one of confidence, and to the extent that sentiment begins improving it would be a positive for growth," said Dana Saporta, director of U.S. economic research at Credit Suisse in New York, one of three forecasters that projected a reading of 63, the highest in the Bloomberg survey. "There are still a lot of headwinds out there, including the continued decline in home prices."

Stocks were little changed after the reports. The Standard & Poor's 500 Index was at 1,265.9 at 11:07 a.m. in New York, up less than 0.1 percent.

Italian Retailers

Italian retailers had the worst Christmas in 10 years, consumer group Codacons said today, as austerity measures to combat the sovereign debt crisis prompted households to cut spending. Italians spent 48 euros ($62.75) less per person this holiday season than the average of the past five years, Rome based Codacons said in a statement on its website.

In China, profit gains at industrial companies cooled. Net income increased 24.4 percent in the first 11 months of 2011 from a year earlier to 4.66 trillion yuan ($737 billion), the National Bureau of Statistics said on its website today. The pace compared with a 25.3 percent gain in the first 10 months and a 27 percent rise in the first three quarters. The lingering Europe debt crisis and a cooling domestic property market are dimming growth prospects for the world's second-largest economy.

The median forecast of 69 economists surveyed by Bloomberg forecast the U.S. consumer confidence gauge would rise to 58.9. Estimates ranged from 52 to 63. The measure averaged 53.7 during the recession that ended in June 2009 and 98 during the economic expansion that ended in December 2007.

Home Prices

The S&P/Case-Shiller index of home values in cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said. The median forecast of 27 economists in a Bloomberg survey projected a 3.2 percent decrease.

The real-estate market is bracing for another wave of foreclosures that may keep pressure on home prices, indicating any housing recovery will take time to develop. Nonetheless, rising builder confidence, a pickup in construction and fewer unsold new properties for sale are among signs the industry that triggered the last recession is steadying.