WASHINGTON -- An abundance of jobs helped push consumer confidence higher this month, but the optimism could be short-lived as the pain at the gasoline pump becomes more acute.
Soaring energy prices may also be starting to harm manufacturers as the Commerce Department reported yesterday that factory orders in July fell by the largest amount in 15 months.
Energy costs, already at record levels, are being driven even higher following Hurricane Katrina's devastating strike along the Gulf Coast, which has shut down oil rigs and petroleum refineries.
The concern is that surging energy costs will at some point cause consumer confidence to falter, resulting in a cutback in consumer spending, which accounts for two-thirds of total economic activity.
However, the Conference Board reported yesterday that consumers remained optimistic in August despite the surge in energy costs. The board's index rose to 105.6, up from a revised 103.6 in July.
Separately, the Commerce Department reported that orders to US factories fell by 1.9 percent in July, the biggest drop since a similar decline in April 2004. Some economists attributed part of that weakness to rising concerns by businesses about how strong demand will remain given this year's surge in energy prices.