The Conference Board’s index increased to 65.9 this month from 62.7 in June, figures from the New York-based private research group showed today. Economists projected a reading of 61.5, according to the median estimate in a Bloomberg News survey. The report showed a gain in the share of consumers anticipating better labor and economic conditions in six months.
A pickup in the housing market and decreases in fuel prices are helping sustain consumer sentiment. At the same time, faster job gains are needed to spur consumer spending, which grew in the second quarter at the slowest pace in a year.
“Consumers are definitely getting some benefit from lower gasoline prices and that is freeing up some income,” Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Philadelphia, said before the report. “Confidence is OK, it’s not great. We need better job growth.”
Stocks held losses after the report. The Standard & Poor’s 500 Index fell 0.1 percent to 1,383.84 at 10:20 a.m. in New York.
Estimates for the Conference Board gauge ranged from 59 to 67 in the Bloomberg News survey of 71 economists. The measure averaged 53.7 during the 18-month recession that ended in June 2009.
Personal Spending
The Commerce Department said today consumer purchases in June cooled, indicating a weak handoff to the second half of the year. Personal spending was unchanged after decreasing 0.1 percent. Incomes climbed 0.5 percent following a 0.3 percent gain.
Another report showed housing prices are stabilizing. The S&P/Case-Shiller index of property values decreased 0.7 percent in May from a year earlier, data from the group showed in New York.
Today’s confidence figures contrast other data on consumer sentiment. The Bloomberg Consumer Comfort Index fell in the week ended July 22 to minus 38.5, the lowest level in two months. The Thomson Reuters/University of Michigan final July index of consumer sentiment was the weakest this year.
“Despite this month’s improvement in confidence, the overall index remains at historically low levels,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “While consumers expressed greater optimism about short-term business and employment prospects, they have grown more pessimistic about their earnings.”
Present Conditions
The Conference Board group’s measure of present conditions decreased to 46.2 from 46.6 in June. The measure of expectations for the next six months increased to 79.1 from 73.4 in June.
The percent of respondents expecting more jobs to become available in the next six months rose to 17.6 from 14.8 the previous month. The proportion of consumers who expect their incomes to rise over the next six months decreased to 14.2 percent from 15.3 percent.
The share of consumers who said jobs are currently plentiful fell to 7.8 percent from 8.3 percent. Those who said jobs weren’t plentiful rose to 51.4 percent from 50.5 percent.
Faster employment growth would help lay the foundation for a pickup in consumer spending, which accounts for about 70 percent of the economy.
Labor Market
Payroll gains slowed to an average 75,000 in the April to June period, down from 226,000 in the first quarter and the weakest in almost two years, Labor Department figures show. The jobless rate has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948.
Gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate after a revised 2 percent gain in the prior quarter, Commerce Department data showed last week in Washington. Household purchases grew at the slowest pace in a year.
Recent data signal consumers are reluctant to step up purchases. Retail sales fell in June for a third consecutive month, the longest period of declines since 2008. Same-store sales rose less than analysts’ estimates at retailers including Target Corp. and Macy’s Inc.
Fed Chairman Ben S. Bernanke and his colleagues on the Federal Open Market Committee, who have pledged to keep the benchmark interest rate low until late 2014, meet today and tomorrow to decide whether more is needed to stimulate the world’s largest economy.
Central bankers will probably forego announcing a third round of large-scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey. (source http://www.businessweek.com )
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