United Parcel Service Inc. (UPS) executives described their financial outlook as "cautious" Thursday, saying conditions aren't "getting dramatically worse" but don't seem to be improving quickly either.

Chief Financial Officer Kurt Kuehn told analysts on a post-earnings conference call that the package-delivery giant is seeing some signs of stabilization, and he predicted the overall third-quarter economic environment will be similar to the second quarter.

He cited average package weights in particular, noting that UPS posted a big year-over-year average weight decline in the second quarter but the trend appears to have flattened out sequentially from the first quarter.

"We don't see any increase in negative momentum" on package weights, Kuehn said.

Meanwhile, he called industry pricing "very competitive" but said it has remained "rational," with customers recognizing that service still matters.

"As the economy improves, we expect pricing to improve as well," he said.

UPS executives said they have yet to see strong evidence either way regarding the caliber of the back-to-school shipping season, although they described themselves as "hopeful" that a solid season will materialize.

On a related note, Kuehn said some apparent second-quarter strength in UPS's premium next-day-air volume was attributable to the exit of competitor Deutsche Post AG's (DPW.XE) DHL unit from the U.S. market.

Volume in the domestic premium air service was off 0.3% in the second quarter, compared with an overall domestic volume decline of 4.6%.

-By Bob Sechler; Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com