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Consumer Confidence Rebounds in May
By ANNE D'INNOCENZIO
AP Business Writer
NEW YORK (AP) -- Consumer confidence bounced back unexpectedly
in May, despite higher gasoline prices that could raise
shoppers' worries about inflation, a private research
group said Tuesday.
The New York-based Conference Board said its Consumer
Confidence Index rose to 108.0 in May, up from a revised
106.3 in April. Analysts had expected the reading to
fall to 104.5. The May reading was the highest since
March when the index was at 108.2.
"The bounce-back in confidence was due primarily
to a more upbeat assessment of present-day business conditions," said
Lynn Franco, director of The Conference Board Consumer
Research Center, in a statement. "Consumers' view
of the job market, both present and six months from now,
was little changed and did not provide a boost in confidence.
The short-term outlook remains cautious and rising gasoline
prices are having a negative impact on consumers' inflation
expectations."
Franco added, "All in all, confidence levels continue
to suggest growth, albeit at a slow pace."
The Present Situation Index, which measures how shoppers
feel now about economic conditions, rose to 136.1 from
133.5 in April. The Expectations Index, which measures
consumers' outlook for the next six months, edged up
to 89.2 from 88.2.
Economists closely monitor consumer confidence since
consumer spending accounts for two-thirds of all U.S.
economic activity.
The upbeat data helped push stocks higher. The Dow Jones
industrial average rose 33.16, or 0.25 percent, to 13,540.44
in midmorning trading.
The report from the Conference Board was good news for
the nation's retailers, which struggled through the worst
same-store sales performance on record in April. Same-store
sales are sales at stores opened at least a year and
are considered a key indicator of a retailer's health.
Merchants' sales continue to be disappointing in May,
fueling concerns that gasoline prices and the slumping
housing market are eating away at spending.
Standard & Poor's housing index on Tuesday showed
that U.S. home prices fell 1.4 percent in the first quarter
compared to a year ago, the first time since 1991 that
prices have shown a quarterly decline.
On Thursday, the Commerce Department reported that sales
of new homes surged in April by the biggest amount in
14 years, but the median price of a new home fell by
the largest amount on record. On Friday, The National
Association of Realtors reported that sales of existing
homes fell by a larger-than-expected amount in April,
while the median price of a home sold fell for a ninth
straight month.
Meanwhile, analysts are closely watching the job market,
which has propped up consumer spending. Job growth slowed
in April as job losses spread beyond the struggling manufacturing
and construction sectors and into retailing and financial
services. The reading, announced in early May, showed
that payrolls grew by just 88,000 and the jobless rate
edged up to 4.5 percent. Economists are expecting 140,000
jobs to be added in May and the unemployment rate to
remain at 4.5 percent when the Labor Department releases
figures Friday.
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