May 26, 2004 in Business

Consumer confidence up slightly

Anne D'Innocenzio Associated Press
 

Fast fact

Better times

Consumers saying business conditions have improved rose to 22.3 percent in May, up from 21.7 percent the previous month. Those claiming conditions have worsened remained unchanged at 21.7 percent.

NEW YORK — Consumer confidence barely budged in May as an improving outlook about jobs offset worries about rising gasoline prices and heightened political uncertainty overseas, the Conference Board reported Tuesday.

The Consumer Confidence Index edged up to 93.2 from a revised 93.0 reading in April, the New York-based group said. The latest reading was slightly below the 94 figure that analysts had expected.

Still, Lynn Franco, director of the Conference Board’s consumer research center, was upbeat and said that strong employment gains in March and April were helping boost consumers’ assessment of current conditions.

“This has made consumers more positive about short-term prospects in the months ahead,” she said in a statement. “The pickup in the job market is offsetting the impact of rising gas prices and escalating tensions overseas.”

April’s consumer confidence figure was initially reported at 92.9, which was better than the 88.5 that analysts had projected.

Economists closely track consumer confidence because consumer spending accounts for two-thirds of U.S. economic activity.

Consumers are being hit with conflicting news. On one hand, they’re seeing a broader-based job recovery, but they are also facing higher gasoline prices, higher interest rates, and more bad news from Iraq.

“Consumer confidence is at a level that is consistent with modest economic growth,” said Mark Vitner, economist at Wachovia Corp. And he said what will keep the index in the mid 90s is the mixed job picture.

“We are adding more jobs, but there are still significant pockets of the country that are not seeing improvements,” he said. For certain labor- intensive industries, including textiles, those jobs won’t be coming back, he said.

Still, on the bright side, Vitner expects that the economy will add a total of 2.5 million jobs this year, which he believes will have three times the economic impact of higher gasoline, assuming they remain at the same level.

The Labor Department is set to release its job figures on June 4. Analysts expect the unemployment rate to remain at 5.6 percent. But they are counting on nonfarm payrolls — government and private employers — to add 215,000 jobs.

Tuesday’s report said that consumers continue to rate current conditions as favorable. Those saying business conditions have improved rose to 22.3 percent in May, up from 21.7 percent the previous month. Those claiming conditions have worsened remained unchanged at 21.7 percent. Consumers claiming jobs are “hard to get” rose to 30.6 percent from 28.0. Those saying jobs are “plentiful,” however, also increased to 16.6 percent from 15.6 percent.

Consumers’ outlook for the next six months remains positive. Those expecting business conditions to improve in the next six months rose to 22.9 percent from 20.8 percent. Those expecting conditions to worsen, however, edged up to 10.1 percent from 9.3 percent.

The employment outlook continues to show signs of improvement. Those anticipating more jobs to become available in the next six months increased to 19.2 percent from 18.3 percent.

© Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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