Consumer Confidence Climbs Higher in July, Beating Consensus Forecast

The Conference Board Consumer Confidence Index climbed higher to 127.4 (1985=100) in July, up from 127.1 in June. The Present Situation Index improved from 161.7 to 165.9, while the Expectations Index declined from 104.0 last month to 101.7 this month.

“Consumer confidence gained marginal ground in July, after a modest decline in June,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of present-day conditions improved, suggesting that economic growth is still strong.”

Consumers’ assessment of current conditions also improved further in July. Those stating business conditions are “good” rose from 37.2% to 38.0%, while those saying business conditions are “bad” fell from 11.5% to 10.1%.

Consumers’ assessment of the labor market was also more favorable. Those claiming jobs are “plentiful” gained from 40.4% to 43.1%, while those claiming jobs are “hard to get” was essentially unchanged at 15.0%.

“However, while expectations continue to reflect optimism in the short-term economic outlook, back-to-back declines suggest consumers do not foresee growth accelerating,” Ms. Franco added.

Consumers’ optimism about the short-term outlook waned again in July.

The percentage of consumers anticipating business conditions will improve over the next 6 months rose from 20.7% to 23.1%. But those expecting business conditions will worsen also rose, from 9.3% to 10.8%.

Consumers’ outlook for the labor market was also mixed.

The proportion expecting more jobs in the months ahead increased from 20.0% to 22.5%, but those anticipating fewer jobs also increased, from 13.1% to 15.7%. Regarding their short-term income prospects, the percentage of consumers expecting an improvement rose from 19.7% to 20.8%, but the proportion expecting a decrease also rose, from 7.9% to 9.2%.