The expectations index, which is based on consumers’ short-term outlook for income, business, and labour market conditions, rose to 74.6 (1985=100) from 68.8 last month. Despite this improvement, the expectations index remained below 80 for the fourth consecutive month, a level that typically signals a recession ahead.

Consumers' views on current business conditions were slightly less positive in May, with 20.3 per cent of consumers describing business conditions as ‘good,’ down from 20.8 per cent in April. Meanwhile, 17.6 per cent of consumers rated business conditions as ‘bad,’ unchanged from the previous month, as per TCB.

In terms of the labour market, consumers' appraisal improved slightly. The percentage of consumers who said jobs were ‘plentiful’ fell to 37.5 per cent from 38.4 per cent in April. However, those who said jobs were ‘hard to get’ decreased to 13.5 per cent from 15.5 per cent.

Consumers showed a slightly less pessimistic view of short-term business conditions. In May, 13.3 per cent of consumers expected business conditions to improve, a slight decrease from 13.4 per cent in April. Meanwhile, 16.8 per cent expected business conditions to worsen, down from 19.1 per cent the previous month.

The short-term labour market outlook also improved marginally. The percentage of consumers expecting more jobs to be available rose to 12.6 per cent from 12.3 per cent in April, while those anticipating fewer jobs decreased to 18.2 per cent from 19.8 per cent.

Consumers' assessment of their short-term income prospects improved, with 16.9 per cent expecting their incomes to increase, up from 16.8 per cent in April. Those expecting their incomes to decrease dropped to 11.0 per cent from 14.0 per cent.

Despite these improvements, the perceived likelihood of a US recession over the next 12 months rose for the second consecutive month in May.

“Confidence improved in May after three consecutive months of decline,” said Dana M. Peterson, chief economist at The Conference Board. “Consumers’ assessment of current business conditions was slightly less positive than last month. However, the strong labour market continued to bolster consumers’ overall assessment of the present situation.”

Fibre2Fashion News Desk (DP)