With consumers becoming more optimistic about the short-term outlook, the Conference Board released a report on Tuesday showing an unexpected improvement in consumer confidence in the month of July.
The Conference Board said its consumer confidence index climbed to 65.9 in July from an upwardly revised 62.7 in June. Economists had expected the index to slip to 61.5 from the 62.0 originally reported for the previous month.
Lynn Franco, Director of Economic Indicators at the Conference Board said, "Despite this month's improvement in confidence, the overall Index remains at historically low levels."
"Consumers' attitude regarding current conditions was little changed in July, but their short-term expectations, which had declined last month, bounced back," she added.
While the present situation index edged down to 46.2 in July from 46.6 in June, the expectations index jumped to 79.1 in July after tumbling to 73.4 in the previous month.
The drop by the present situation index came as consumers saying business conditions are "good" dipped to 13.8 percent from 14.2 percent. At the same time, those saying business conditions are "bad" also fell to 34.2 percent from 35.9 percent.
Consumers' assessment of the labor market was also mixed, the Conference Board said, with those saying jobs are "hard to get" falling to 40.8 percent from 41.2 percent, while those saying jobs are "plentiful" edged down to 7.8 percent from 8.3 percent.
Meanwhile, the report said consumers expecting business conditions to improve over the next six months rose to 18.9 percent in July from 16.0 percent in June. Consumers expecting business conditions to worsen fell to 14.6 percent from 15.8 percent.
The outlook for the labor market was also more upbeat, with consumers expecting more jobs in the months ahead rising to 17.6 percent from 14.8 percent and those anticipating fewer jobs slipping to 20.3 percent from 20.8 percent.
"However, while consumers expressed greater optimism about short-term business and employment prospects, they have grown more pessimistic about their earnings," Franco said.
The report showed that consumers expecting an increase in their incomes declined to 14.2 percent in July from 15.3 percent in June.
Franco said, "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."
by RTT Staff Writer
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