Consumer Sentiment Index Up in May

Easing worries about the economy and jobs led to an unexpected rebound in consumer confidence in May, a private research group said Tuesday. But a report that tracks Midwestern manufacturing activity fell sharply in May to its lowest level in almost two years.

The Conference Board said that its consumer confidence index rose to 102.2 from a revised 97.5 in April. The reading was much better than the 96 that analysts had expected, which would have been a decline from the original April reading of 97.7.

The consumer confidence index is now at the highest level since it reached 103 in March. May’s increase marked a reversal in a three-month downward trend from 105.1 in January.

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

Still, stocks fell Tuesday and traders cited the disappointing reading of economic activity in the Midwest.

The Purchasing Management Assn. of Chicago said its index of business activity in that area dropped to 54.1 in May from 65.6 in April and 69.2 in March. A reading above 50 indicates expansion in manufacturing, while a figure below 50 means contraction. The May reading was the lowest since June 2003.

The Chicago indicator is considered a precursor of the national assessment to be released by the Institute of Supply Management today.

In a third report, U.S. corporate leaders were less optimistic last month about the economy than they were in March , a quarterly survey of chief executives of some of the country’s largest companies found.

The Business Roundtable’s outlook index for the next six months fell to 94.3, its lowest level since March 2004, from 104.4 in March, according to a poll of 123 of the Washington-based lobbying group’s 160 members. The members of the Business Roundtable employ more than 10 million people and account for about $4 trillion in annual revenue, the group said.

Seventy percent of CEOs surveyed said they expected hiring to increase or remain the same, down from 82%. Thirty percent said they expected hiring to decline, compared with 18% who said so three months ago.

Eighty-five percent of executives predicted sales would increase during the next six months, down from 89% in the March survey.

Associated Press and Bloomberg News were used in compiling this report.