US consumers remain upbeat

Greenspan: wants consumers to keep spending

A leading barometer of US consumer confidence rose for a second month in June, as people become more optimistic about an economic recovery in the second half of the year.

The economy should continue to expand at its current slow rate

Lynn Franco

In a report that could dampen hopes of a further aggressive interest rate cut from the Federal Reserve on Wednesday, the Conference Board said its broad index of consumer attitudes rose to 117.9 in June from an upwardly-revised 116.1 in May.

Analysts were predicting a slight dip in confidence.

Fed chairman Alan Greenspan has repeatedly said that keeping consumers spending is the key to preventing the current economic slump from deepening.

A second set of figures released on Tuesday showed that orders for expensive goods - such as cars and electrical goods - bounced back in June after a sharp drop in April.

'More optimistic'

The recent drop-off in consumer confidence, which was the sharpest since the last recession, began late last year.

In February, the confidence index hit a four-and-a-half year low of 109.2.

Lynn Franco, director of the Conference Board's consumer research centre said: "Consumers are currently more optimistic than they have been all year regarding business and job prospects over the next six months.

"There is little reason to believe that consumers will drastically halt their spending habits, and also little reason to expect consumers to go on shopping binges.

"The economy should continue to expand at its current slow rate," she said.

Demand up

Demand for cars and computer chips registered especially strong increases, according to figures from the Commerce Department.

Orders for durable goods - items expected to last at least three years - jumped by 2.9% in June, a much stronger performance than the 0.4% rise many analysts were predicting.

The report, which showed an increased appetite for many expensive goods, provided a bright spot for manufacturers, which have been hit hard by the economic slowdown that has gripped the US since the second half of last year.