A gauge of U.S. consumer confidence edged lower, but was relatively unchanged in July, a sign consumer spending could continue to support the U.S. economy over the second half of the year.
The Conference Board’s consumer-confidence index fell to 97.3 in July from a downwardly revised 97.4 in June, the research group said Tuesday. Economists surveyed by The Wall Street Journal expected a reading of 96.3 in July.
Andrew Hunter, assistant economist at Capital Economics, said the higher-than-expected reading suggested “consumption growth will continue at a decent pace in the third quarter.”
“The continued strength of consumer confidence supports our view that an acceleration in hourly wage growth, along with further gains in housing and equity prices, will ensure that spending continues to grow at a solid 2% to 2.5% annualized pace over the rest of this year,” he said in a note to clients.
The present-situation index rose in July to 118.3 from a downwardly revised 116.6. The expectations index fell slightly to 83.3 from 84.6 in June.
“Consumers remain cautiously optimistic about growth in the near-term,” said Lynn Franco, the Conference Board’s director of economic indicators.
Sentiment about the labor market was mixed. The share of respondents saying jobs were “plentiful” fell slightly to 23%, but outweighed the share who said jobs were “hard to get,” which edged down to 22.3%. Hiring has slowed in 2016 to an average of 172,000 jobs a month, compared with a monthly average of 229,000 jobs in 2015.
The latest result was nearly dead-even with June’s result, although that survey was taken before the United Kingdom’s vote to leave the European Union, an event that shook markets. But this reading contrasts with a preliminary survey of U.S. consumer sentiment by the University of Michigan, which declined in July following the Brexit vote. In the University of Michigan survey, Brexit was cited mostly by high-income respondents, who may be more sensitive to gyrations in the stock market.
Laura Rosner, senior U.S. economist at BNP Paribas, said Tuesday’s results hinted the final University of Michigan figure, due out Friday, would rebound from the midmonth reading.
“These survey data suggest that U.S. consumer attitudes have not materially shifted in the face of global political events (‘Brexit’) that initially sparked volatility in financial markets,” she said.
Consumer spending accounts for roughly two-thirds of U.S. economic output. After a slow start to the year, Americans have picked up their pace of spending in recent months.
Source: AVCS
