""Consumer confidence readings are showing the most strength of...

""Consumer confidence readings are showing the most strength of any data on the economic calendar.""

Highlights

Consumer confidence readings are showing the most strength of any data on the economic calendar. The Conference Board's consumer confidence index jumped in a roughly 15-point move for the second straight month, coming in at a much higher-than-expected 54.9 in May. All the gain continues to be in expectations where the component index, at 72.3, rose more than 20 points for a second straight month. The gains in expectations swept across all readings with business conditions, employment, and income all showing many more optimists and many fewer pessimists.

But the assessment of current conditions showed only the slightest improvement. Business conditions are still described as bad by 45 percent of the sample, but there is a slight dip in those saying jobs are hard to get, at 44.7 percent vs. 46.6 percent and a result that hints at another month of incremental improvement for the May jobs report.

There was even good news in buying plans which improved for vehicles and appliances, but here again the focus is on the outlook, in this case purchases out to six months. In more bad news for the housing sector, buying plans for homes, despite falling home prices, fell back 3 tenths to 2.3 percent.

Confidence readings are subject to big swings and do not always correspond to changes in retail spending. But this report is pointing to an upward shift in improvement, offering us a chance to a test the link between what consumers see ahead and how they actually spend. Appetite for risk improved with this report as stocks and commodities rose while the dollar fell.

Market Consensus Before Announcement

The Conference Board's consumer confidence index moved up from near historic lows in April to 39.2 from 26.9 in March. The biggest improvement was in the expectations component which jumped nearly 20 points to 49.5, suggesting that consumers see better times ahead. But with labor markets worsening-notably for continuing jobless claims and higher unemployment-this optimism may not last.