Consumer Confidence Up, Index Indicates
U.S. consumer confidence rose unexpectedly this month and existing home sales fell less than forecast in June, according to reports released Tuesday.
The data suggested that the economy remained resilient, but there were also indications of slackening economic growth and diminished corporate profits.
Top executives at bellwethers 3M Co. and United Parcel Service Inc. said there were growing signs of an uncertain outlook for the U.S. economy through the latter part of the year.
The Conference Board said its index of consumer sentiment climbed to 106.5 in July, up from 105.4 in June. Sentiment indexes have traditionally been seen as a gauge of U.S. consumer spending, which accounts for roughly two-thirds of economic activity.
Analysts had expected the index to fall to 104.
“Present-day conditions remain favorable, though not as strong as earlier this year,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “Expectations for the month ahead remain cautious and also below levels earlier this year.”
The business research group’s present-situation index rose to 133 from 132.2 in June, while the expectation component improved to 88.8 from 87.5 in June.
Labor market conditions appeared little changed in July, the Conference Board said.
The divergence between the Conference Board’s consumer confidence number and the University of Michigan’s consumer sentiment survey for July, which fell to 83 from 84.9 in June, may be pointing to a recession in the near future, one analyst said.
“The contrary behavior of [the Conference Board’s] survey compared with the University of Michigan survey is a mystery,” Brian Fabbri, managing director of economic research at BNP Paribas, wrote in a research note. “The last time the gap between the two indexes was this wide was in 2000 just before the last recession.”
The pace of sales of existing homes in the United States fell 1.3% in June, to the lowest rate since the beginning of the year, as sales of condominiums tumbled and price increases were the weakest in 11 years.
The National Assn. of Realtors said sales of existing homes fell to a seasonally adjusted annual rate of 6.62 million units in June from an upwardly revised rate of 6.71 million units in May.
Analysts had expected home resales to slow to a rate of 6.58 million units.
Sales of existing homes have been falling from a record level set in 2005 as mortgage rates and home prices have risen.
“Over the last year, we’ve seen a slowdown in home sales,” said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. “Inventories of homes rose in June, so we are still seeing a potential overhang of homes for sale, which will probably keep the housing market soft.”
There were a record 3.73 million homes for sale at the end of June, representing a 6.8-month supply, compared with 6.4 months’ worth at the end of May.
Also released Tuesday, the Federal Reserve Bank of Richmond, Va., said its monthly manufacturing index rose to 12 in July from a reading of 4 in June, beating economists’ forecasts.
