The improvement in the Conference Board's consumer confidence index to 95.4 in May, from 94.3, was a pleasant surprise given that other measures of confidence had weakened in response to the recent surge in gasoline prices.
Admittedly, the expectations index in the Conference Board survey did decline to 86.9, from 87.1. However, that deterioration was more than offset by a sizeable rebound in the present situation index to 108.1, from 105.1.
Normally the rebound in present situation is attributable to increased confidence about the labour market - either about jobs or wages. But the net proportion of respondents saying that jobs were plentiful rather than hard to get was -6.6 in May, a little better than the -6.9 reading in April, but still below the recent high of -3.9 reached in January. The net proportion of respondents expecting their incomes to rise over the next six months (rather than fall) also dropped back a little to +6.3 in May, from +6.6.
"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." notes Capital Economics
