RTTNews - Consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rising to its highest level in eight months.
The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised reading of 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month.
With the increase, the index rose to its highest level since September of last year, when the index came in at a reading of 61.4.
The bigger than expected increase was partly due to a notable improvement in the outlook for the months ahead, with the expectations index jumping to 72.3 in May from 51.0 in April.
Lynn Franco, Director of the Conference Board Consumer Research Center said, Consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months.
While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us, Franco added.
The report showed that those expecting business conditions to improve over the next six months rose to 23.1 percent in May from 15.7 percent in April, while those anticipating conditions to worsen fell to 17.8 percent from 24.4 percent.
Consumers were also less pessimistic about the employment outlook, as those expecting more jobs in the months ahead rose to 20.0 percent from 14.2 percent and those expecting fewer jobs decreased to 25.2 percent from 32.5 percent.
The Conference Board also said that the present situation index edged up to 28.9 in May from 25.5 in April. While those saying business conditions are good rose to 8.7 percent from 7.9 percent, those saying conditions are bad edged up 45.3 percent from 44.9 percent.
Franco said, Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first.
With regard to the job market, those saying jobs are hard to get fell to 44.7 percent from 46.6 percent, while those saying jobs are plentiful rose to 5.7 percent from 4.9 percent.
In other economic news, Standard & Poor's released a report earlier in the day showing that home prices continued to show record declines in the first quarter, with the data suggesting that the recent signs of stabilization in the housing market have not yet led to a turnaround in prices.
The report showed that the S&P/Case-Shiller U.S. National Home Price Index fell 19.1 percent in the first quarter compared to the same quarter a year ago. The decrease marked the steepest decline in the series' 21-year history.
S&P added that the 20-City Composite Home Price Index fell at an annual rate of 18.7 percent in March compared to economist estimates of an 18.4 percent decline. The 10-City Composite Home Price Index for March was down 18.6 percent year-over-year.
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