June 1, 2005--Increased optimism regarding the economy and job market ended a three-month decline in consumer confidence, according to a private business research group.
The Conference Board announced Tuesday that the May Consumer Confidence Index rose to 102.2 from 97.5 in April, just short of recapturing the March figure of 102.4 The Present Situation Index rose to 116.7 from 113.8 in the previous month, and the Expectations Index rose to 92.5 from 86.7.
"The Present Situation Index and the Expectations Index explain the two driving forces behind this month's surge," said Lynn Franco, director of the Board's consumer research center. "Consumers are simultaneously facing more favorable current conditions and increasing their expectations for continued growth in the economy in the future."
Consumers gave May's current conditions a slightly more positive assessment than they did for April. Those who said business conditions are "bad" dropped to 16.8 % from 17,6% while those who said conditions are "good" remained unchanged at 26.5%.
The labor market elicited mixed attitudes. Consumers who believe jobs are "plentiful" increased to 22.6% from 20.4% last month, and those who view jobs as "hard to get" increased to 24.2% from 22.9%.
Outlook for both future business conditions and the labor market was rosier. Consumers anticipating improved business conditions increased to 18.6% from 17.7%, and those expecting worse conditions slid to 9.5% from 9.9%.
Those expecting more jobs to become available increased to 14.9% from 14% in April while those expecting fewer jobs decreased to 15.9% from 18.4%.
"This turnaround could very well signify that we've gotten past the bottom of the recent downward trend in both consumer optimism and small business outlook," said William Dunkelberg, chief economist at the National Federation of Independent Businesses. "The course we are on is pretty clear--the economy is steadily doing better and better."