A modestly improved assessment of the labor market helped lift consumer confidence this month after a sharp retreat in April.
The Conference Board’s Consumer Confidence Index rose to 95.4 from 94.3 last month, when it pulled back from a 101.4 mark in March. The April figure had been revised downward — to 94.3 from 95.2 — since the last report a month ago.
The Present Situation Index picked up 3 points to 108.1 from 105.1 in April, but the Expectations Index continued to recede, falling to 86.9 from 87.1 in April.
“After a three-month slide, the Present Situation Index increased, propelled by a more positive assessment of the labor market. Expectations, however, were relatively flat following a steep decline in April,” said Lynn Franco, director of economic indicators at The Conference Board. “While current conditions appear to be improving, consumers still remain cautious about the short-term outlook.”
An encouraging sign was the longer-term view of the job market among respondents. Those expecting more jobs in the months ahead increased to 14.6 percent from 13.8 percent a month ago, while those anticipating fewer jobs declined to 15.5 percent from 16.4 percent. Those expecting personal income growth remained flat at 17.4 percent, while the percentage expecting a decline in income increased to 11.1 percent from 10.8 percent.
The cutoff for the preliminary May results was May 15.
Chris G. Christopher Jr., director of consumer economics at IHS Global Insight, noted that consumer confidence has “been on a monthly up-and-down pattern since the beginning of the year.” While the May tabulation is 8.4 points below January’s 103.8 reading, the highest in 2015, it is more than 16 points over the 78.3 result of February 2014.
“There are many positives on the consumer front compared to a year ago — improved job prospects and lower pump prices,” Christopher pointed out. “However,” he noted, “recent consumer news has been mixed — the March employment report was disappointing and gasoline prices started creeping up, while April’s employment report was well received.”
He expects both consumer spending and confidence to gain traction because of disposable income growth.
“Wage gains have been outpacing consumer price increases, giving consumers some extra spending power,” he said.