New York, NY, Aug. 26--Consumer confidence bounced back in August from a dip the previous month, a private research group said Tuesday.
The New-York-based Conference Board said its Consumer Confidence Index rose to 81.3 in August, up 4.3 points from a revised 77.0 in July. Analysts had expected a reading of 79.6 this month.
"The welcome bounce back in confidence this month was entirely due to consumers' optimism about the future," said Lynn Franco, director of the group's consumer research center. "However, continued optimism will depend on positive developments in the labor market."
Consumers showed growing optimism about the economy over the next six months, though their assessment of current conditions again deteriorated slightly. The Conference Board's expectations index rose to 94.4 in August from 86.3 in July, while the present situation index declined to 61.6 from 63.0.
Their assessment of the labor market was mixed. Those reporting that jobs are "hard to get" rose to 34.1 percent from 32.7 percent in July, while those claiming jobs are "plentiful" also rose, to 11.1 percent from 10.7 percent.
Consumer opinion is often driven by headlines, said Mark Vitner, senior economist at Wachovia, and a run of bad news this month--from corporate layoffs to a bombing in Baghdad--may have colored people's views of the current situation. Other economic reports released this week on home and durable goods sales might offer a clearer picture of their underlying feelings.
"When you've had external shocks, it may be more important to see what consumers are doing rather than what they're saying," Vitner said. "It takes a tremendous amount of confidence to buy a home. The same can be said for motor vehicles sales."
The Commerce Department reported earlier Tuesday that manufacturers saw demand for big-ticket goods rise for the second straight month in July. The department also reported that new-home sales dropped in July, as rising mortgage rates turned off some househunters, but still ranked the second-best month on record.
Those reports came a day after the National Association of Realtors said sales of previously owned homes soared to an annual rate of 6.12 million units in July--the best month on record.
Stocks fell Tuesday as investors shrugged off the generally positive reports and cashed in profits from the market's recent gains.
In late morning trading, the Dow Jones industrial average was down 74 points, at 9,243. The broader market was also lower. The Nasdaq composite index fell 22 points to 1,742. The Standard & Poor's 500 index declined 8 points to 985.
The Conference Board's gauge of consumer confidence has been on the rise since posting steep declines during the Iraq war in February and March. The index lurched from a low of 61.4 in March to readings between 81 to 83 from April to June, before dropping to 77 last month.
While the overall index rose more than expected, Vitner said, the survey included two disappointing elements. The present situation index has remained persistently low since the Iraq war, when it slid from 81.1 in February to 61.4 in March, and the percentage of consumers who say work is hard to find continues to rise.
"Even though consumers are more upbeat about the economy's prospects down the road, there are still a large percentage of households that remain concerned about current economic conditions," Vitner said. "There's no denying that the economy has picked up, but there's also no denying that it's very uneven and there are parts of the economy that are hurting."
Consumers also offered a lackluster appraisal of current business conditions in August, with 30.9 percent rating present conditions as "bad," up from 30.2 percent last month. Those holding the opposite view declined to 15.9 percent, from 16.5 percent.
