The Consumer confidence index rolled-back 7.3 points in March according to the Conference Board. The index now stands at 124.1. Despite the decline, the index remains at elevated levels with a positive trend line. On the other-hand, the labor market continues to show impressive gains and workers remain confident about their future. On a year over year comparison, the 3MMA composite index was down 3.0%.
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 fell 12.2 points month on month, (m/m) to 160.6 and was relatively flat y/y. The Expectation score dumped 6.1 points m/m to 106.2. Looked at on a y/y basis, the expectation index was down 4 points to 99.8 in March19.
Consumer confidence survey states, “Confidence has somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report. Despite these dynamics, consumers remain confident that the economy will continue expanding in the near term. However, the overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth.”
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.