This key economic indicator rose for the first time in months.

The Consumer Confidence Survey, the first of two major economic reports to be released this week, was released on Tuesday, providing a glimmer of light that helped lift most markets. The consumer confidence index, which had been declining for three consecutive months, improved for the first time since January.

It is still too early to tell whether rising consumer confidence is a sign of slowing inflation. But you can learn more about the state of the economy on Friday, when the Bureau of Economic Analysis releases its latest personal consumption expenditures index, a key indicator the Federal Reserve uses to track inflation.

Increased consumer confidence

Consumer confidence surveys track consumer attitudes, purchase intentions, and expectations about inflation, stock prices, and interest rates. It therefore serves as an important indicator of the current business situation and its potential for development in the coming months.

The good news is that consumer confidence rose significantly in May, rising to 102 from 97.5 in April. Although this is the first month since January that this figure has risen, it is still significantly lower than January’s 114.8.

Nonetheless, the score of 102 exceeded economists’ expectations. That’s because they generally expected consumer confidence to decline again in May (average expected score of 96).

The survey consists of two parts. The Current Situation Index (PSI) rose from 140.6 in April to 143.5 in May. Meanwhile, the Expectations Index (EI), which focuses on expected future reliability, rose further from 68.8 to 74.6.

The latter is generally the more important measure and results are mixed. The fact that it has risen so sharply indicates that consumers have a much better feel for where things are headed.

On the other hand, the EI gauge is still showing low readings. The Conference Board, which administers the survey, said an EI score below 80 is generally a sign that a recession is approaching.

“Consumer confidence across all age groups has improved compared to last month,” said Dana Peterson, chief economist at The Conference Board. “In terms of income, people earning more than $100,000 saw the greatest increase in confidence. “On a six-month rolling average, confidence continues to be highest among the youngest (under 35) and wealthiest (earning more than $100,000) consumers.”

Remaining concerns about economic recession

The next PCE index report on inflation is not scheduled to be released until Friday. However, the Consumer Confidence Survey does contain insight into what consumers are seeing when it comes to inflation.

For example, in the May Consumer Confidence report, consumers cited the prices of food and groceries in particular as the biggest influence on how they view the U.S. economy. Additionally, average 12-month inflation expectations rose slightly from 5.3% to 5.4%.

Based on this outlook, it is not surprising that the percentage of consumers expecting higher interest rates next year has increased from 55.2% to 56.2%. Additionally, despite a slight improvement in consumer confidence, scores rose for the second month in a row in May when asked about the likelihood of a recession in the next 12 months.

One area that consumers feel particularly good about is the stock market. According to this survey, 48.2% of consumers expected stock prices to rise in the future, while 25.4% expected them to fall, and 26.4% expected them to remain unchanged.

The market was mostly higher Tuesday, with the Nasdaq Composite Index rising 106 points, or 0.5%. The S&P 500 and Russell 2000 both rose slightly (0.1%), while the Dow Jones Industrial Average fell about 240 points (0.6%) as of Tuesday afternoon.