The Conference Board reported that consumer confidence edged slightly higher, up from 81.0 in July to 81.5 in August. The increase defied consensus expectations of reduced sentiment, particularly following the news of reduced confidence in the University of Michigan’s preliminary report. (Note that the University of Michigan and Thomson Reuters will release a final report this Friday.)
Instead, the Conference Board data continue to show an upward trend overall in consumer confidence this year. After averaging 66.3 in the first five months of 2013, the Consumer Confidence Index has averaged 81.5 in the three months of June to August. As such, it continues to be near highs not seen since the January 2008.
These data tend to rise and fall on pocketbook issues, and higher gasoline prices were anticipated to reduce sentiment. While the overall index was higher, perceptions about the current economic environment dipped somewhat, with that index down from 73.6 to 70.7. In contrast, the expectations component rose from 86.0 to 88.7.
Feelings about the labor market were mixed. The percentage of respondents saying that jobs were plentiful declined from 12.3 percent to 11.4 percent. At the same time, one-third of respondents said that jobs were hard to get (down from 35.2 percent in July). Yet, despite this, the expectations data were more upbeat. The percentage of those taking the survey who felt that there will be more jobs in the next six months increased from 16.7 percent to 17.6 percent. Likewise, the percentage anticipating increased income in the months ahead rose from 15.7 percent to 17.4 percent.
One of the more worrisome elements in this survey was the data on buying intentions. The percentage planning to purchase autos, homes, and appliances all fell in August. Higher borrowing costs are likely to blame for this softening of buying plans. For instance, the percentage planning to buy a home dropped from 6.9 percent to 5.1 percent; while, auto purchasing plans dropped from 12.7 percent to 10.4 percent. This suggests weaker retail and home sales data in the months ahead, if true.
Chad Moutray is the chief economist, National Association of Manufacturers.