New York, NY, Oct. 28--Improvements in the labor market helped push up consumers' assessment of the economy in October, a private research group reported Tuesday.
The Conference Board said that its consumer confidence index for October rose to 81.1 from a revised 77.0 in September, but remained under the 81.7 seen in August. The index was equal to 100 in 1985.
The October reading was above economists' expectation of 79.0 for the month, found in a survey conducted by Dow Jones Newswires.
The research group said that its present situation index, a gauge of consumers' assessment of current economic conditions, ended five straight months of declines and increased to 66.8 in October, from a revised 59.7 in September.
Meanwhile, the consumer expectations index, describing views on the state of economic activity over the next six months, rose to 90.7 in October, from a revised 88.5 the prior month.
Measures of consumer confidence have been volatile lately and appear to be settling into a holding pattern relative to the highs seen at the beginning of the decade. October's reading was driven by increasing optimism that a long beleaguered employment sector may be turning around.
"A more favorable job market was a major factor in the turnaround" in the present situation index, Conference Board economist Lynn Franco said in a press release. "The belief that this trend will continue has boosted expectations" and lifted hopes that the holiday retail spending season will be strong, Franco said.
The group said that those who deemed jobs as "hard to get" fell to 33.8% this month, from 35.1% in September. Those deeming jobs as "plentiful" increased to 11.8%, from 9.9% a month before. Meanwhile, 19.7% of those surveyed said more jobs would become available over the next half-year, up from 16.6% in September.
The Conference Board's report comes on a day in which the Federal Reserve is meeting to deliberate on the course of monetary policy. There is unanimity in the view that the Fed will leave interest rates steady.
There's a less solid consensus behind expectations of what the Fed will tell markets about the economy in its policy statement. Most expect the Fed will continue to say the risks of a further weakening in inflation are big enough to drag down an otherwise improving economic outlook.
But given that growth measures have been picking up--economists expect that the third-quarter gross domestic product likely expanded by as much as 6%--many say the central bank will at least have to acknowledge in stronger terms what is good about the economy.
And in many observers' views, such a move will be the first step in laying the groundwork for an eventual tightening in monetary policy. Most economists expect that growth will have improved enough by some time late next year to allow the Fed to increase interest rates.
The Conference Board's consumer confidence report is based on a mail-based survey of around 5,000 households, conducted monthly. The cutoff date for responses was Oct. 21.
