New York – Consumers’ confidence in the economy picked up momentum in June, rising to a higher-than-expected level for the second month in a row despite an upward march in oil prices.
The gain reported by The Conference Board put consumer confidence at a three-year high.
The business research group said its Consumer Confidence Index rose 2.7 points to 105.8 this month from a revised 103.1 in May, better than the 104 analysts expected.
In May, the index shot up more than five points after dropping in April.
June’s reading was the highest since June 2002, when the index stood at 106.3. Consumer sentiment has been choppy over the past year, reflecting uncertainty in the economy.
“The improvement in consumers’ mood suggests that business activity and labor market activity will continue to pick up over the next several months,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “And, with consumers in better spirits, and job concerns remaining relatively steady, there is little reason to expect a dramatic shift in consumers’ spending.”
However, Franco said June’s confidence levels may be hard to sustain given that oil prices, which rose steadily during the month, surpassed $60 a barrel for the first time in recent days.
“This could take a bite out of consumer confidence,” Franco said, though she acknowledged that consumers so far have been able to weather oil-price volatility well.
Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C., agreed that the run-up in oil prices could cause confidence to slip. But he said he’s not worried as long as sentiment stays around the 90 to 105 level, consistent with moderate economic growth.
Vitner added that the uptick in confidence offers reason to be optimistic about the Labor Department’s June jobs report, to be released July 8.
Analysts expect nonfarm payrolls to add 180,000 jobs in June, compared with a 78,000-job increase the prior month. The unemployment rate is expected to remain at 5.1 percent.
