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US Consumer Confidence Surges in July: Conference Board

H.S. Borji
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US consumer confidence surged in July, rising to the highest level in nearly seven years as faster than forecast job creation helped boost consumers’ assessment of the current economic situation.

The Conference Board’s gauge of consumer confidence surged from 86.4 to 90.9 in July, far surpassing estimates calling for 85.5. The June reading was revised upward from 85.2.

Consumers’ assessment of the labour market was more favourable in July, with 15.9 percent of respondents indicating jobs are “plentiful.”

Consumers were more optimistic about the future, with 20.2 percent of respondents saying they expect business conditions to improve over the next six months. Only 18.4 percent of respondents said the same in June.

Consumers said they were more optimistic about the labour market. Those anticipating more jobs in the coming months increased from 16.3 percent to 19.1 percent, while those anticipating fewer jobs declined from 18.4 percent to 16.4 percent.

Consumers were slightly more optimistic their incomes would grow in the months ahead. Those anticipating higher incomes increased from 16.7 percent to 17.3 percent, Conference Board data showed.

“Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2),” said Conference Board director of economic indicators Lynn Franco. “Strong job growth helped boost consumers’ assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations. Recent improvements in consumer confidence, in particular expectations, suggest the recent strengthening in growth is likely to continue into the second half of this year.”

The consumer mood has been resistant to changes in recent months amid a spate of economic data that has painted a mixed picture of US recovery.

The US economy in the first quarter contracted at the sharpest rate since 2009, as severe weather disrupted economic activity. Gross domestic product declined at an annual rate of 2.9 percent in the first three months of the year, revised estimates from the Commerce Department confirmed.

The Commerce Department will post its first estimate of second quarter GDP on Wednesday. Median estimates suggest the US economy accelerated at an annual rate of around 3 percent between April and June.

Meanwhile, the labour market is undergoing one of its most resilient recoveries in more than a decade, as job creation has eclipsed the 200,000 mark in each of the last five months. US employers added 288,000 nonfarm payrolls in June as the unemployment rate dropped to 6.1 percent.

The Labor Department on Friday is expected to show the addition of another 230,000 nonfarm payrolls in July. The unemployment rate is forecast to remain unchanged.

Average earnings are forecast to grow 0.2 percent from the previous month.

A separate gauge released last week showed US consumer confidence unexpectedly declined in July, hitting a four-low. The preliminary estimate of the Thomson Reuters/University of Michigan consumer sentiment index dipped from 82.5 to 81.3.

Reuters and the U of M will post a final reading of the July consumer sentiment index Friday.

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