The Consumer confidence index increased by 2.4 points in May according to the Conference Board. The index now stands at 128.0. Bloomberg reports that a strong job market influenced the views on the current state of the economy, as the labor market continues to post impressive gains and workers remain confident about their future. On a year over year comparison, the 3MMA composite index was up 10.4 points or 9.0%.
The Consumer Confidence Survey measures the level of confidence individual households have in the performance of the economy. Survey asks a nationwide representative sample of 5,000 households, of which approximately 3,500 responses. Households are asked five questions that include (1) a rating of business conditions in the household’s area, (2) a rating of business conditions in six months, (3) job availability in the area, (4) job availability in six months, and (5) family income in six months that go into the top line index.
Figure 1 shows the Composite, Present and Expectation indexes from 1980 to present. The Present Situation score increased 4.2 points month on month, (m/m) to 161.7 and was stronger by 21.1 points or 15.0% y/y. The Expectation score jumped by 1.36 points m/m to 105.6. Looked at on a y/y basis, the expectation index was up 3.3 points or 4.0%.
Figure 2 chart two sub-indexes, Employment – jobs plentiful, (blue-line) and expected income – increase, (green-line). The 3MMA jobs plentiful index gained 4.2 points m/m to 42.4. Those who saw jobs harder to get, (3MMA) increase 0.3 points to 15.8. The expectation of higher wages index declined by 0.5 points to 21.3, while those expecting an income decrease was up 0.3 point to 8.2.
Purchasing plans were down across the board, with potential home buyers moving down 1.7 points to 5.5% and appliance buyers falling 3.2 points to 48.9%. Those planning to purchase an automobile over the next six months fell 0.7 point to 12.9%. Despite the highest consumer confidence in years, purchasing plans for cars and houses are depressed compared with a year ago.
At Gerdau we routinely monitor consumer confidence, readily available credit and spending habits since we know that increased consumer spending translates to stronger steel sales and vice versa.