Consumer Confidence Gains in May, Present Conditions Index Hits 17-Year High

The Conference Board said the Consumer Confidence Index rose in May to 128.0 (1985=100), up from a modest decline to a revised 125.6 in April. The Present Situation Index rose from 157.5 to a 17-year high at 161.7, while the Expectations Index rose from 104.3 last month to 105.6 this month.

“Consumer confidence increased in May after a modest decline in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions increased to a 17-year high (March 2001, 167.5), suggesting that the level of economic growth in Q2 is likely to have improved from Q1.”

Consumers’ assessment of current conditions improved in May.

The percentage claiming business conditions are “good” rose from 34.8% to 38.4%, while those claiming business conditions are “bad” fell marginally from 12.3% to 12.0%.

“Consumers’ short-term expectations improved modestly, suggesting that the pace of growth over the coming months is not likely to gain any significant momentum,” Ms. Franco added. “Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term.”

Consumers’ assessment of the labor market was somewhat mixed. The percentage stating jobs are “plentiful” rose from 38.2% to 42.4%. But those claiming jobs are “hard to get” also rose, though more moderately from 15.5% to 15.8%.

Consumers were modestly more positive about the short-term outlook in May.

The percentage of consumers anticipating business conditions will improve over the next 6 months fell slightly from 23.6% to 23.1%. However, the percentage expecting business conditions to worsen also fell and more significantly, from 9.8% to 8.3%.

Consumers’ outlook for the labor market was mixed.

The percentage of consumers expecting more jobs in the months ahead rose from 18.6% to 19.7%, while those thinking there will be fewer jobs also rose, from 13.2% to 13.9%. Regarding their short-term income prospects, the percentage of consumers expecting an improvement fell from 21.8% to 21.3%. The proportion expecting a decrease gained from 7.9% to 8.2%.

The monthly Consumer Confidence Survey is based on a probability-design random sample and is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was May 16.