WASHINGTON — Consumer confidence rose in November to the highest level in five months and a gauge of business activity unexpectedly climbed, signaling the recovery is taking hold heading into 2011.

The Conference Board’s sentiment index increased to 54.1, exceeding the median forecast in a Bloomberg News survey, figures from the New York-based research group showed Tuesday. The Institute for Supply Management-Chicago Inc. said its business gauge advanced to the highest level since April.

Gains in spending that are giving retailers a boost during the holiday shopping season are more likely to continue into next year as households sense that job and income prospects are improving.

“The economy has weathered the soft patch and is regaining some lost momentum,” said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York. “Consumers are being fairly jolly as far as the early Christmas season is concerned.”

Economists forecast the confidence gauge would improve to 53, according to the median of 78 projections in a Bloomberg survey. Estimates ranged from 50 to 60. The index averaged 96.8 during the last economic expansion that ended in December 2007. The Conference Board revised the October index down to 49.9 from a previously reported 50.2.

On Wall Street, stock indexes ended November on a down note Tuesday, notching their first monthly losses since August.

The Dow Jones industrial average lost 46 points. It had been down as much as 110 points earlier in the day. The index pared most of its losses after President Obama and Republican lawmakers promised to seek a compromise before the end of the year on extending Bush-era tax cuts.

Extending the cuts would motivate investors to hold stocks since they wouldn’t be subject to higher capital-gains taxes next year. It would also encourage companies to continue paying dividends, which are taxed at a more favorable rate.

The Dow ended November with a loss of 1 percent. It had rallied through September and October on hopes that a bond-buying program by the Federal Reserve would boost the economy.

The Dow reached its highest point of the year on Nov. 5, two days after the Fed announced its $600 billion economic stimulus plan. On Tuesday, the Dow fell 46.47, or 0.4 percent, to close at 11,006.02.

The Standard & Poor’s 500 index fell 7.21 or 0.6 percent, to 1,180.55. The Nasdaq composite index dropped 26.99, or 1.1 percent, to 2,498.23.

The S&P 500 fell 0.2 percent in November, the Nasdaq 0.4 percent.