Consumer confidence high but factory orders down
August 30, 2005
Consumer confidence in the United States rose again in August, according to Conference Board figures released on Tuesday, with index numbers up to 105.6, after July’s confidence level of 103.6. This increase came even though energy prices were up again, probably due to strong jobs growth.
Analysts were unsure, however, how much longer this high confidence can continue is questionable. Some said that the time was coming, sooner rather than later, when the economy could weaken due to the energy situation.
In a separate report, the US Commerce Department released data showing that factory orders decreased by their biggest percentage in 15 months in July. Orders were down by 1.5 percent. The decline in orders was led by the transportation sector, which fell 8.8 percent as orders for both commercial and military aircraft were down, even though orders for new cars and trucks actually grew by 3.7 percent. Orders for durable goods were down by 4.9 percent, confirming preliminary numbers released last week, while orders for non-durable goods - things like gasoline, food, and clothing - were up by 1.7 percent, largely due to higher prices for petroleum products.
While analysts said that economic growth in the US had enough energy behind it that the economy should be able to stay out of recession through the end of the year, but that the fall in factory orders were an indication that businesses are more concerned than they have been about continuing demand in the face of rising energy prices.