Consumers felt more optimistic in August and better than they have in two years, but their optimism is still half of what it was a year ago.
The Conference Board Consumer Confidence Index is at 56.9, up from 51.9 in July and beating the consensus estimates of economists of an index of 53. However, while the latest result reflects the second month in a row that consumer sentiment improved and the largest gain since August 2006, there’s still much room for improvement from what the index was a year ago at 105.6.
The Present Situation Index fell in August to 63.2 from 65.8 last month, while the other component, the Expectations Index, rose to 52.8 from 42.7 in July.
“Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year,” said Lynn Franco, director of The Conference Board Consumer Research Center.
Franco said the gain in the expectations component suggests “better times may be ahead,” but noted that “overall readings are still quite low by historical standards and it is still too early to tell if the worst is behind us.”
Economist John Ryding of RDQ Economics noted, “While the overall consumer confidence reading was less weak than expected — likely a result of the pullback in gasoline prices — the readings on the labor market continued to deteriorate, falling to the weakest level since October 2003.”
According to the Conference Board, consumers’ assessment that business conditions are “bad” rose slightly to 33.2 percent from 32.6 percent. Their appraisal of the labor market took a turn for the worse, with respondents who said jobs are “hard to get” rising to 32 percent from 30.2 percent in July.
Consumer expectations fared better than their assessment of current conditions. Those who expect business conditions to worsen over the next six months declined to 25.8 percent from 32.4 percent. And consumers who anticipate fewer jobs in the months ahead fell to 30.6 percent from 37.3 percent, while those who expect more jobs rose to 10.5 percent from 8 percent.
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