U.S. households were slightly more optimistic in August than the prior month, owing to a brighter outlook for jobs and incomes six months from now, the Conference Board said Aug. 27.
The improvement in future expectations offset a modest worsening in the assessment of current economic conditions, the New York-based nonprofit organization said.
As a result, the overall consumer confidence index rose by 0.5 point to 81.5 seasonally adjusted (1985 = 100) from 81.0 in July, as revised, but was still lower than the 82.1 reading in June.
August was the third straight month the index has remained above 80--the first such stretch since early 2008, at the outset of the recent recession.
“Consumers were moderately more upbeat about business, job, and earning prospects,” Lynn Franco, the board's director of economic indicators and surveys, said.
Analysts said confidence has increased significantly since the start of the year.
The index's three-month moving average now stands at 81.6, a noticeable increase from the 65.5 reading back in January, Mark Vitner, a senior economist at Wells Fargo Securities, said.
The improvement suggests “consumer spending should continue its momentum in the second half of this year,” Vitner said. “We continue to expect real personal spending to expand [at] around a 2 percent pace over the next two quarters,” supported by ongoing job gains and modest growth in personal income, he said.
In the second quarter, inflation-adjusted consumer spending increased 1.8 percent at an annual rate, slowing from 2.3 percent in the first three months of 2013, according to the Commerce Department (147 DLR D-24, 7/31/13).
Within the overall consumer confidence index, the assessment of current conditions component fell 2.9 points in August to 70.7 from 73.6 the prior month, while the expectations index rose by 2.7 points to 88.7 from 86.0, the Conference Board reported.
The share of consumers who consider jobs currently “hard to get” fell this month, to 33.0 percent from 35.2 percent in July, but the proportion seeing jobs as plentiful also declined, to 11.4 percent from 12.3 percent. The majority (55.6 percent) viewed jobs as “not so plentiful.”
The Labor Department's most recent jobs report showed that employers added 162,000 jobs to payrolls in July, while the unemployment rate declined to 7.4 percent from 7.5 percent the previous month (149 DLR D-1, 8/2/13).
In August, the share of Americans viewing current business conditions as good slipped to 18.4 percent from 20.8 percent in July, while the proportion saying conditions are bad was little changed, at 24.8 percent. The rest saw conditions as “normal.”
Looking ahead, the proportion of survey respondents expecting business conditions to be better six months from now inched up to 20.1 percent this month from 19.9 percent in July, and those anticipating worse conditions edged down to 11.1 percent from 11.3 percent. About two-thirds (68.8 percent) foresaw no change.
Similarly, consumers expecting there to be “more jobs” in six months rose to 17.6 percent in August from 16.7 percent the prior month, while those anticipating fewer jobs declined to 17.3 percent from 17.7 percent. Almost two-thirds (65.1 percent) foresaw no change in job availability.
Also, the proportion of households expecting their incomes to increase during the coming six months climbed to 17.4 percent from 15.7 percent, and those anticipating a decrease edged down to 13.5 percent from 13.7 percent, with the rest predicting their incomes will stay the same.
“In fact, income expectations, which had declined sharply earlier this year with the payroll tax hike, have rebounded to their highest level in two and a half years,” the Conference Board's Franco said.
The figures were derived from a survey of 5,000 households conducted through Aug. 15.
Information about the consumer confidence report is available at http://www.conference-board.org/data/consumerconfidence.cfm.
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