U.S. Consumer Confidence Unexpectedly Improves In May

(RTTNews) - Consumer confidence in the U.S. improved modestly in May after declining sharply in April, the Conference Board revealed in a report released on Tuesday.

The Conference Board said its consumer confidence index rose to 95.4 in May from a downwardly revised 94.3 in April.

Economists had expected the consumer confidence index to dip to 95.0 from the 95.2 originally reported for the previous month.

The unexpected increase by the headline index reflected an improvement in consumers' assessment of current-day conditions, as the present situation index climbed to 108.1 in May from 105.1 in April.

While consumers saying business conditions are "good" edged down to 25.2 percent from 25.5 percent, those saying conditions are "bad" also decreased to 17.4 percent from 19.2 percent.

Consumers were also mixed in their assessment of the job market, as those saying jobs are "plentiful" increased to 20.7 percent from 19.0 percent but those saying jobs are "hard to get" also rose to 27.3 percent from 25.9 percent.

Meanwhile, the report also said consumers' optimism about the short-term outlook edged down in May, with the expectations index dipping to 86.9 from 87.1 in the previous month.

The Conference Board said the percentage of consumers expecting business conditions to improve over the next six months inched up to 15.6 percent from 15.4 percent, while those expecting business conditions to worsen also increased to 10.8 percent from 9.1 percent.

Consumers' outlook for the labor market improved, however, as those anticipating more jobs in the months ahead increased to 14.6 percent from 13.8 percent and those anticipating fewer jobs fell to 15.5 percent from 16.4 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the increase by the consumer confidence index was "a pleasant surprise given that other measures of confidence had weakened in response to the recent surge in gasoline prices."

"Overall, most confidence indicators have fallen back over the past few months, but remain at levels that historically have been consistent with stronger real consumption growth than we have actually seen in recent months," he added.

Friday morning, the University of Michigan is scheduled to release its revised report on consumer sentiment in May.

The consumer sentiment index for May is expected to be upwardly revised to 90.3 from the mid-month reading of 88.6, although it would still come in well below 95.9 in April.