Consumer confidence inches up in August

New York -- The Conference Board Consumer Confidence Index, which had declined in July, increased slightly in August. The Index now stands at 81.5, up from 81.0 in July.

Optimism for the near future drove the overall improvement in Index performance, as the Expectations Index increased to 88.7 from 86 last month while the Present Situation Index decreased to 70.7 from 73.6. Consumers’ assessment of current conditions moderately declined. Those stating business conditions are “good” decreased to 18.4% from 20.8%, while those stating business conditions are “bad” was virtually unchanged at 24.8%. Consumers’ appraisal of the labor market was mixed. Those claiming jobs are “plentiful” decreased to 11.4% from 12.3%, while those claiming jobs are “hard to get” declined to 33.0% from 35.2%.

Consumers’ expectations, which had retreated in July, increased in August. Those expecting business conditions to improve over the next six months edged up to 20.1% from 19.9%. Those expecting business conditions to worsen declined slightly to 11.1% from 11.3%.

Consumers’ outlook for the labor market remained upbeat. Those anticipating more jobs in the months ahead increased to 17.6% from 16.7%, while those anticipating fewer jobs edged down to 17.3% from 17.7%. The proportion of consumers expecting their incomes to increase improved to 17.4% from 15.7%. Those expecting a decrease declined slightly to 13.5% from 13.7%.

Lynn Franco, director of economic indicators for the Conference Board, said consumer short-term expectations are improving to levels not seen since early 2011.

“Consumers were moderately more upbeat about business, job and earning prospects,” said Franco. “In fact, income expectations, which had declined sharply earlier this year with the payroll tax hike, have rebounded to their highest level in two and a half years. Consumers’ assessment of current business and labor market conditions, on the other hand, was somewhat less favorable than last month.”