The U.S. Conference Board's index of consumer confidence rose to 98.1 in June, rising 12.2 points from the prior month, the largest since November 2011. The June reading was above consensus expectations of 91.5. Gains were widespread throughout the expectations and present situation indices, implying more optimism among consumers. While the move is in the right direction, the headline index continues to be lower than its pre-COVID levels and has much catching up to do, noted Barclays in a research report.
The rebound in the sentiment is in line with the rise seen in the University of Michigan’s consumer sentiment index for June, as well as the recovery in consumer activity-related data for May, such as retail sales, auto sales, consumer goods imports, and real personal consumption spending. Moreover, the rebound in confidence is coming oof a solid employment report in May, which indicated strong job gains after two months of falls.
“Taken together, these data suggest that consumers have turned more confident in their income and employment prospects, and consumption spending likely recovered earlier than we had expected”, said Barclays.
Among the two sub-indices, the Present Situation Index fell the most since February, with a trough in April, reflecting the impacts of the pandemic. Nevertheless, consumers have turned a bit more positive about current business and employment conditions since April, likely encouraged by the phased re-opening of the economy and rebounds in the labor market. The labor market differential has rebounded in the last couple months; however, it continues to be in the negative territory. Consumers’ assessments of near-term economic conditions, as captured in the expectations index, have also rebounded.
“That said, gains in these indices come off of a low base and have some way to go before reaching their pre-COVID levels from February”, added Barclays.