Consumer confidence surges
Index hits 2-year high in July as job market recovers
NEW YORK -- Consumer confidence reached a two-year high in July, the fourth straight month of improvement, as the job market continued to recover. The jump was higher than analysts were expecting and helped push stocks higher on Wall Street.
A separate report showed that new home sales dipped less than expected in June and remained at their second-highest level on record.
The Conference Board, a private research group based in New York, reported yesterday that its index of consumer confidence in US business conditions jumped to 106.1 in July, up from 102.8 in June and well ahead of the figure of 102.0 that investors had been expecting. It was the highest level for the indicator since June 2002.
The group attributed the sharp increase to continued improvement in the labor market, with more consumers reporting that they believed jobs were plentiful and fewer expecting that conditions would worsen over the next six months.
A measure of consumer expectations for future economic conditions rose sharply in June, while another one gauging their sense of current conditions edged higher. The group's "expectations index" jumped to 105.8 from 100.8 last month, while the "present situation" index was up to 106.5 from 105.9.
Economists said the strong showing in consumer confidence helped ease concerns about a number of poor readings on the economy that came in for June, including a payroll report that came in at half the level analysts had been expecting, sending jitters through Wall Street.
Consumer confidence is closely watched by economists because consumer spending accounts for two-thirds of all US economic activity.
The better-than-expected report helped lift the Dow Jones industrial average above the 10,000 level for the first time since Friday. The Dow jumped 123.22, or 1.2 percent, to close at 10,085.14, marking the indicator's best one-day gain since June 7. The Standard & Poor's 500 index climbed 10.76, or 1 percent, to 1,094.83.
In a separate report yesterday, the Commerce Department said new home sales edged down 0.8 percent in June after soaring to a record pace in May. Nonetheless, the lower annual rate of home sales of 1.33 million units was still the second-highest level on record behind May's pace of 1.34 million.
The decline in the pace of home sales was smaller than analysts had been predicting and indicated that the housing sector, one of the best-performing parts of the economy, was still moving ahead strongly despite interest rates that are about a full percentage point higher than they were a year ago.
Economists are expecting sales of both new and existing homes to set records for the year, even taking into consideration an anticipated slowdown in the second half of the year.
