Consumer confidence rises on more upbeat expectations
A measure of consumer confidence has increased on more upbeat expectations for improving business and labor conditions, ending a four-month decline.
The Conference Board reported that its Consumer Confidence Index (CCI) rose more than three points in July to 65.9.
A component of the CCI tracking consumers’ short-term outlook advanced, while a component of the index tracking assessments of current conditions retreated.
Even with the increase, the CCI remains at an historically low level that reflects mixed sentiments, said Lynn Franco, director of economic indicators for the Conference Board, a business research and membership group.
“Consumers’ attitude regarding current conditions was little changed in July. But their short-term expectations, which had declined last month, bounced back,” Franco said. “While consumers expressed greater optimism about short-term business and employment prospects, they have grown more pessimistic about their earnings. Given the current economic environment — in particular the weak labor market — consumer confidence is not likely to gain any significant momentum in the coming months.”
The Conference Board bases the CCI on the results of monthly surveys of U.S. households. Economists closely monitor the index because consumer spending accounts for nearly 70 percent of economic activity in the country.
For July, a more optimistic outlook for business and labor conditions pulled up the Expectations Index nearly six points to 79.1.
The share of consumers responding to the survey upon which the July index was based who expect business conditions to improve over the next six months rose nearly three points to 18.9 percent. The proportion of those who anticipate deteriorating conditions fell more than a point to 14.6 percent.
The share of consumers who expect more jobs in coming months increased nearly three points to 17.6 percent. The proportion of those who anticipate fewer jobs edged down a half point to 20.3 percent.
At the same time, though, a less upbeat assessment of current business and labor conditions pulled down the Present Situation Index four-tenths of a point to 46.2. The proportion of consumers who described business conditions as “good”
slipped four-tenths of a point to 13.8 percent. The share of those who said conditions are “bad” fell more, though — almost two points to 34.2 percent. The proportion of consumers who characterized jobs as “plentiful” declined a half point to 7.8 percent. The share of those who said jobs are “hard to get” fell four-tenths of a point to 40.8 percent.
Consumers also were less upbeat about their prospects for higher earnings — 14.2 percent expect their incomes to increase, down more than a point from June.