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Consumer Confidence Jumps in May

Index at highest level in eight months

U.S. consumer confidence surged upward again in May, rising to 54.9 from 40.8 in April, and showed improvement in job expectations, the Conference Board said.

The research organization said the Present Situation Index still was weak, but increased to 28.9 from 25.5 last month. The biggest jump came in the Expectations Index, which measures shoppers’ outlook for the next six months and rose to 72.3 from 51 in April as consumers grew more optimistic.

“After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (it was 61.4 in September),” said Lynn Franco, director of The Conference Board Consumer Research Center. “Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first.

“Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months,” she said. “While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us.”

Consumers’ overall assessment of current-day conditions improved again. Those claiming business conditions are “good” increased to 8.7% from 7.9%. However, those claiming conditions are “bad” increased to 45.3% from 44.9%. 

Consumers’ appraisal of the job market was also more favorable. Those claiming jobs are “hard to get” decreased to 44.7% from 46.6% in April. Those saying jobs are “plentiful” edged up to 5.7% from 4.9%.

Consumers' short-term outlook improved significantly in May. Those expecting business conditions will improve over the next six months increased to 23.1% from 15.7%, while those anticipating conditions will worsen declined to 17.8% from 24.4% in April.

The employment outlook was also less pessimistic. The percentage of consumers expecting more jobs in the months ahead increased to 20% from 14.2%, while those anticipating fewer jobs decreased to 25.2% from 32.5%. The proportion of consumers anticipating an increase in their incomes edged up to 10.2% from 8.3%.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households, conducted by research firm TNA, with a cutoff date of May 19.

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