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Economic Watch: Consumer Confidence, New Home Sales Improve

May 26, 2015

By Evan Lockridge

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A measure of consumer confidence has increased following a sharp downturn, while new home sales rebounded strongly, according to reports released on Tuesday.

The Conference Board’s Consumer Confidence Index increased in May to a reading of 95.4, up from 94.3 in April.

Also, the private research group’s Present Situation Index increased from 105.1 last month to 108.1 in May, while the Expectations Index edged down to 86.9 from 87.1 in April.

“After a three-month slide, the Present Situation Index increased, propelled by a more positive assessment of the labor market,” said Lynn Franco, director of economic indicators at The Conference Board. “Expectations, however, were relatively flat following a steep decline in April. While current conditions in the second quarter appear to be improving, consumers still remain cautious about the short-term outlook.”

"While current conditions in the second quarter appear to be improving, consumers still remain cautious about the short-term outlook.”

Consumers’ assessment of current-day conditions improved in May. Those saying business conditions are “good” edged down from 25.5% to 25.2%. However, those claiming business conditions are “bad” also fell, from 19.2% to 17.4%.

Consumers were mixed in their assessment of the job market. Those stating jobs are “plentiful” increased from 19% to 20.7%, while those claiming jobs are “hard to get” rose from 25.9% to 27.3%

Consumers’ optimism about the short-term outlook edged down in May. The percentage of consumers expecting business conditions to improve over the next six months inched up from 15.4% to 15.6%, while those expecting business conditions to worsen also increased, from 9.1% to 10.8%.

Meantime, a separate report from the U.S. Commerce Department show sales of newly built, single-family homes rose 6.8% in April from the month before to a seasonally adjusted annual rate of 517,000 units in April.

“Sales are moving forward and our builder members are telling us they are starting to see more activity as more buyers get off the fence and enter the marketplace,” said Tom Woods, chairman of the National Association of Home Builders.

Over the past year new, single-family home sales are up 26.1% and so far this year have averaged an annual rate of 515,000, which if it continues through June, would mark the best first half-year period since 2008.

Regionally, home sales were mixed, rising 36.8% in the Midwest and 5.8% in the South. The Northeast posted a 5.6% decline and the West fell 2.3%.

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