Consumer confidence in US beats forecast; rises sharply

Consumer confidence in the US increased sharply this month to the highest level since last September, as people in the US see a flicker of hope for the economy and prospects for the expectation of an improvement in the job market.

Releasing its Consumer Confidence Index report today, the Conference Board, said that consumer confidence had improved considerably in April and posted another large gain in May.

The Index now stands at 54.9 up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April.

Lynn Franco, director of the Conference Board Consumer Research Centre, said, "After two months of a significant improvement, the Consumer Confidence Index is now at its highest level in eight months.

''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. Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labour 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," she added.

Consumers' overall assessment of current-day conditions improved again. Those claiming business conditions are "good" increased to 8.7 per cent from 7.9 per cent.

However, those claiming conditions are "bad" increased to 45.3 per cent from 44.9 per cent. Consumers' appraisal of the job market was also more favourable. Those claiming jobs are "hard to get" decreased to 44.7 per cent from 46.6 per cent in April. Those saying jobs are "plentiful" edged up to 5.7 per cent from 4.9 per cent.

Consumers' short-term outlook improved significantly in May. Those expecting business conditions will improve over the next six months increased to 23.1 per cent from 15.7 per cent, while those anticipating conditions will worsen declined to 17.8 per cent from 24.4 per cent in April.

The employment outlook was also less pessimistic. The percentage of consumers expecting more jobs in the months ahead increased to 20.0 per cent from 14.2 per cent, while those anticipating fewer jobs decreased to 25.2 per cent from 32.5 per cent.

The proportion of consumers anticipating an increase in their incomes edged up to 10.2 per cent from 8.3 per cent.

The Consumer Confidence Survey is based on a representative sample of 5,000 US households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company.