Consumer Confidence Highest Since March 2008 (ANN, TIF)

The Conference Board's Consumer Confidence Index rose 5.6 points to 63.3 in May. The consensus estimate was looking for a reading of 58.3. The index is now at its highest level since March 2008. Typically, consumer confidence can be predicted based upon changes in the unemployment rate, oil prices, stock prices, and media alerts. With all four of these items weakening in May, it is surprising to see consumer confidence rose. However, nonfarm payrolls posted their highest gains since 2006. Strength in the labor sector appeared to outweigh the remainining correlated components. As the nonfarm payrolls continue to rise, consumer confidence should strengthen in tandem. Rising consumer confidence bodes well for consumer discretionary stocks such as AnnTaylor ANN and Tiffany & Co. TIF.