According to the same report released today, the Present Situation Index decreased to 132.7 from 134.1. The Expectations Index, however, edged up to 87.6 from 85.1 last month.

Commenting on this finding, Franco added, ‘Despite the up-tick, consumers remain concerned about the short-term outlook. Furthermore, the Present Situation Index lost ground for the second consecutive month, a signal that the economy is shifting into lower gear heading into the second half of this year.’

Still, consumers’ outlook for the next six months, which had deteriorated in May, improved moderately in June. Those expecting business conditions to worsen decreased to 11.8 percent from 12.9 percent. Those expecting business conditions to improve increased to 16.8 percent from 16.5 percent.

Meanwhile, in another study released this week, the Conference Board projects that salary increases will stay below 4% this year.

According to the study, pay increases for most salaried workers will average only 3.5 percent this year and stay at that level through 2007. For the fourth consecutive year, salary increases are below 4 percent as employers keep the lid on budgets.

“Moderate inflation has allowed employers to continue to control payroll costs,” says Charles Peck, compensation specialist at The Conference Board. “This continued control is reflected in the pattern of salary increase budgets this year compared with last year’s projections.” For all industries as a group and for all three employee groups (nonexempt, exempt and executive) 2006 salary budgets are virtually identical to last year’s projections.

Pay increases in diversified financial services and insurance were slightly higher than projected; diversified service was slightly lower.

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