June Consumer Confidence Rebounds after Tough Spring
The Conference Board, New York, said its Consumer Confidence Index posted a solid increase in June (pre-Brexit) following stumbles in April and May.
The Index now stands rose to 98.0, up from 92.4 in May. The Present Situation Index increased from 113.2 to 118.3, while the Expectations Index rose from 78.5 to 84.5 in June.
“While the Consumer Confidence survey closed well before the results of the Brexit vote were released, the June data do serve as a useful benchmark to where consumers saw the economy before the British referendum disrupted global financial markets,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Consumers generally felt pretty good about the economic environment.”
“Consumers were less negative about current business and labor market conditions, but only moderately more positive, suggesting no deterioration in economic conditions, but no strengthening either,” said Lynn Franco, director of economic indicators with The Conference Board. “Overall, consumers remain cautiously optimistic about economic growth in the short-term.”
The report said consumers’ appraisal of current conditions improved in June. Those stating business conditions are “good” increased slightly from 26.1 percent to 26.9 percent, while those saying business conditions are “bad” decreased from 21.4 percent to 17.7 percent. Consumers’ assessment of the labor market was mixed. Those claiming jobs are “plentiful” declined from 24.5 percent to 23.4 percent, however those claiming jobs are “hard to get” also decreased from 24.5 percent to 23.3 percent.
Consumers’ optimism regarding the short-term outlook improved in June. Those expecting business conditions to improve over the next six months increased from 15.0 percent to 16.8 percent, while those expecting business conditions to worsen decreased slightly, from 11.7 percent to 11.4 percent.
Consumers’ outlook for the labor market was more favorable than last month. The percentage anticipating more jobs in the months ahead increased from 12.5 percent to 14.2 percent, while those anticipating fewer jobs decreased marginally from 18.2 percent to 17.9 percent. The proportion of consumers expecting their incomes to increase improved from 16.5 percent to 18.2 percent, while the proportion expecting a reduction edged down from 12.6 percent to 11.5 percent.
Vitner noted consumers’ mixed assessment of labor market conditions gives some tentative support to the notion that hiring has slowed amid concerns about sluggish global economic growth, rising compensation costs and political uncertainty. “June’s improvement, however, only partially reverses the deteriorating trend in expectations for income growth seen most of this year, which once again offers some confirmation of the softer employment numbers reported in recent months,” he said.
