Consumer Confidence Rebounds in May
By ANNE D’INNOCENZIO, AP Business Writer
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NEW YORK - Consumer confidence bounced back unexpectedly in May, despite higher gasoline prices that could raise shoppers’ worries about inflation, a private research group said Tuesday.
The New York-based Conference Board said its Consumer Confidence Index rose to 108.0 in May, up from a revised 106.3 in April. Analysts had expected the reading to fall to 104.5. The May reading was the highest since March when the index was at 108.2.
“The bounce-back in confidence was due primarily to a more upbeat assessment of present-day business conditions,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. “Consumers’ view of the job market, both present and six months from now, was little changed and did not provide a boost in confidence. The short-term outlook remains cautious and rising gasoline prices are having a negative impact on consumers’ inflation expectations.”
Franco added, “All in all, confidence levels continue to suggest growth, albeit at a slow pace.”
The Present Situation Index, which measures how shoppers feel now about economic conditions, rose to 136.1 from 133.5 in April. The Expectations Index, which measures consumers’ outlook for the next six months, edged up to 89.2 from 88.2.
Economists closely monitor consumer confidence since consumer spending accounts for two-thirds of all U.S. economic activity.
The upbeat data helped push stocks higher. The Dow Jones industrial average rose 33.16, or 0.25 percent, to 13,540.44 in midmorning trading.
The report from the Conference Board was good news for the nation’s retailers, which struggled through the worst same-store sales performance on record in April. Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer’s health.
Merchants’ sales continue to be disappointing in May, fueling concerns that gasoline prices and the slumping housing market are eating away at spending.
Standard & Poor’s housing index on Tuesday showed that U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 that prices have shown a quarterly decline.
On Thursday, the Commerce Department reported that sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home fell by the largest amount on record. On Friday, The National Association of Realtors reported that sales of existing homes fell by a larger-than-expected amount in April, while the median price of a home sold fell for a ninth straight month.
Meanwhile, analysts are closely watching the job market, which has propped up consumer spending. Job growth slowed in April as job losses spread beyond the struggling manufacturing and construction sectors and into retailing and financial services. The reading, announced in early May, showed that payrolls grew by just 88,000 and the jobless rate edged up to 4.5 percent. Economists are expecting 140,000 jobs to be added in May and the unemployment rate to remain at 4.5 percent when the Labor Department releases figures Friday.