NEW YORK — Even as summer draws to an end, consumers seem to be counting on sunnier days. Improved outlooks on future job prospects and the economy fueled a pickup in consumer confidence in July.
Still, Americans clearly remain edgy about the economy, and the 4.3 percent August rise in the confidence index did not offset the 6.9 percent drop last month, according to the Conference Board’s monthly survey of 5,000 households.
The better-than-expected gain brought the consumer confidence index to 81.3 compared with an upwardly revised 77 last month.
The improvement was driven by stronger growth in the Expectations portion of the index, which rose to 94.4 from 86.3. The Present Situation half of the index posted its fourth straight monthly decline, to 61.6 from 63, its lowest reading since March’s 61.4.
“The welcome bounce in confidence was driven by consumer expectations that business conditions will continue to improve, more jobs will become available and income will increase over the next several months,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. She said during periods of economic recovery, it is common to see volatility in the index, but added that the relatively high level of the Expectations index in recent months suggests growth is ahead.
Nonetheless, she said consumers are waiting for a clear improvement in the labor market.
Jessica Walker, an economist with Moody’s Investors Service, said, “Consumers aren’t really content with current conditions because the labor market is still showing general signs of weakness.” She noted the U.S. economy has lost 328,000 jobs through July this year, leaving the unemployment rate at a relatively high level of 6.2 percent.
Despite the concerns about employment, economists cited recent positive economic reports on housing sales, retail sales and durable goods as evidence of an impending recovery.
“The proof is in the pudding,” said Diane Swonk, an economist with Bank One Corp. “Retailers had a pretty good August.”
According to the survey, more Americans are expecting business conditions to improve over the next six months, with 22.5 percent saying so in August, up from 20 percent in July. The number of consumers expecting conditions to deteriorate fell to 10.7 percent from 11.4 percent.The number of consumers saying they anticipate the job market to improve in the coming months increased to 18 percent from 16.6 percent. Those expecting fewer jobs to become available declined to 18.6 percent from 19.6 percent. The proportion of consumers anticipating an increase in their incomes jumped to 20.1 percent from 15.9 percent.
But consumers’ were not upbeat in appraising current business conditions. Those rating present business conditions as bad edged up to 30.9 percent from 30.2 percent, while those holding the opposite view declined to 15.9 percent from 16.5 percent. Those saying jobs are “hard to get” rose to 34.1 percent from 32.7 percent. Consumers claiming jobs are “plentiful” also increased to 11.1 percent from 10.7 percent.
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