NEW YORK-After reaching a five-year high in June, the consumer confidence index reversed by 1.8 points this month to 80.3, according to The Conference Board, which provides the monthly indicator.
Lynn Franco, the board’s director of economic indicators, attributed the pullback to a weakening of consumers’ economic and job expectations. Much of the decline in the index stemmed from a 6.4-point drop in the expectations, one of the two key components of the overall index, to 84.7. The present situation index, meanwhile, gained 4.9 points to 73.6 in the July survey.
Franco also noted that at its July level, the index “remains well above the levels of a year ago. Consumers’ assessment of current conditions continues to gain ground, and expectations remain in expansionary territory despite the July retreat.”
Underscoring Franco’s point, consumers’ appraisal of current conditions, including business conditions and the job market, was more positive in July than in June. A greater percentage of consumers rated current business conditions as “good,” while the percentage of consumers who consider current business conditions “bad” declined. In addition, a larger ratio of consumers said jobs are “plentiful,” and a smaller percentage of consumers claimed that jobs are “hard to get.”
Looking ahead, a lesser percentage of consumers said they expect business conditions to improve over the next six months, while the ratio of those expecting business conditions to worsen remained unchanged. Also, the percentage of consumers foreseeing more jobs in the months ahead fell back, while the percentage of those expecting fewer jobs rose.
“Overall, indications are that the economy is strengthening and may even gain some momentum in the months ahead,” Franco said.