Consumer confidence halts slide; homes keep falling

By Burton Frierson

NEW YORK (Reuters) - Consumer confidence halted a six-month slide in July, but barely climbed from its lowest level in more than a decade, while home prices continued their record decline in May.

The Conference Board said its overall monthly measure of consumers' mood rose to 51.9 this month -- the first increase since December -- from an upwardly revised 51.0 in June. Last month's reading was the lowest in 16 years.

U.S. home prices plunged 15.8 percent on the year in 20 leading metropolitan areas, accelerating their slide from the previous month, according to the closely watched Standard & Poor's/Case Shiller report, though the decline was not bad as some feared.

Analysts said oil's retreat from record highs gave confidence a lift. But they warned that the improvement could be temporary while a sinking job market and the worst housing slump since the Great Depression still weigh on sentiment.

"We know the consumers are very attuned to gas and oil prices and they have been coming down," said Robert Brusca, chief economist at Fact and Opinion Economics in New York.

"It's hard to put a shiny gloss on this confidence report." he added.

On Wall Street, stocks extended their gains on the confidence report, which confounded expectations of a slight fall in sentiment, and the dollar also firmed versus the euro and yen.

U.S. government bonds, which generally benefit from signs of economic weakness, extended their losses.

"VERY PESSIMISTIC"

Despite July's slight rise, the consumer confidence index was still down by more than half since the same month last year, when it was at 111.90. Since then, housing market troubles have triggered the most severe credit crisis in at least a decade.

"Consumers' outlook, while slightly improved from last month, continues to be very pessimistic," the Conference Board said in its report.

The consumer confidence index dates back to 1967. It hit its lowest ever reading at 43.2 in December 1974.

The Conference Board, an industry group, said its gauge of inflation expectations edged lower, to 7.6 percent, after hitting a record high of 7.7 percent in May and June. Federal Reserve policy-makers have expressed concerns about keeping inflation expectations in check.

The confidence report showed consumers' view of job prospects deteriorating, with their assessment of jobs being hard to get rising to the highest in four years and "jobs plentiful" declining to its lowest since late 2003.

The divergence between the two measure is at the widest in 4-1/2 years, when the job market was emerging from the slump associated with the recession at the start of this decade.