Consumer confidence up slightly
Conference Board's measure at highest level since April as long-term outlook improves.
NEW YORK (CNNMoney.com) -- A key indicator of consumer confidence rose surprisingly in September, the highest reading since April, but the index was measured before all of last week's developments in the credit crisis.
The Conference Board said Tuesday that its Consumer Confidence Index rose to 59.8 from an upwardly revised 58.5 in August.
A survey of economists had expected the index to fall to 55, according to Briefing.com.
Despite the gain, the index was well below year-earlier levels as consumers grapple with a weak job market, falling home values and a volatile economy. Last September, the index stood at 99.5.
"These results did not capture all of the tumultuous events in the financial sector this month, and until the dust settles a bit more, we will not know the full impact on consumers' expectations," said Lynn Franco, director of the Conference Board Consumer Research Center.
Franco added that shocks tend to have a temporary adverse impact on consumer confidence for up to four months, unless the volatility results in significant job losses that extend that period.
This month, Wall Street and Main Street were rocked by the bankruptcy of Lehman Brothers, the rescue of American International Group, a series of bank failures and mergers and the debate over the $700 billion bailout package.
The turbulent stock market and the weak labor market will likely weigh on consumer confidence for months to come, according to Adam York, an economist at Wachovia. He noted that lower gas prices may be one reason why consumer confidence made slight gains this month.
"But this is not a sign that we're out of the woods. Confidence will remain under pressure for some time to come, certainly into next year," York said.
York said that the expected declins in personal consumption, a predicted loss of 150,000 jobs this month and an expected hike in the unemployment rate will continue to negatively impact consumer confidence.
The survey showed that consumers have an increasingly negative outlook for their circumstances in the short term, but expect their future to improve.
The Present Situation Index decreased to 58.8 from 65 in August, and from 65.8 in July. The Expectations Index rose to 60.5 from 54.1 in August and from 42.7 in July.
Consumers surveyed were increasingly negative regarding the state of the economy. Those who rated business conditions as "bad" increased to 34.2% from 32.7%, while those claiming business conditions are "good" declined to 12.5% from 13.7% last month. Last month, out-of-work Americans filed for jobless benefits at the highest rate in seven years.
Consumers' assessment of the labor market continued to worsen as well. Those saying jobs are "hard to get" rose to 32.8% from 31.7% in august, while those claiming jobs are "plentiful" decreased to 12.2% from 13.5%
However, the outlook for the job market slightly improved. The percentage of consumers anticipating fewer jobs in the months ahead declined to 26.8% from 30%, while those anticipating more jobs increased to 11.8% from 10.7%.
Prospects for better incomes decreased slightly, with 14.2% of consumers expecting to earn more, down slightly from 15.4%.
The index was based on a survey of 5,000 U.S. households conducted by TNS for the New York-based Conference Board, a business research organization. The index uses 1985 as its benchmark, setting the index at 100.