US consumer confidence rebounds in June, but raises concern about job market

The US Conference Board Consumer Confidence Index rebounded in June after falling in May. The index for June came in at 98, up from May’s 92.4. Consumers seemed to have been riding high before the Brexit news shook the financial markets, noted Wells Fargo in a research report. In spite of the 5.6 points gain in June, the data opened certain worries regarding the job market.

Both the present situation and expectations indices rose in June. The present situation index rose to 118.3, highest since September 2015. The assessment of consumers of the labor market was quite mixed this month. According to the Conference Board, “those claiming jobs are “plentiful” declined from 24.5 percent to 23.4 percent, however those claiming jobs are “hard to get” also decreased from 24.5 percent to 23.3 percent”.

The mixed assessment of consumers regarding the labor market conditions provides certain tentative support to the view that hiring has decelerated amidst worries of sluggish economic growth globally, increasing compensation costs and political uncertainty.

Meanwhile, the expectations index rose to 84.5 in June from 78.5. June’s index was the highest since January. This series is influenced more by the financial markets swings and geopolitical factors. With the recent events of Brexit, the expectation series is expected to decline in July, according to Wells Fargo.

According to the latest data, improvement was seen throughout all three categories. Those expecting business conditions to improve over the next six months increased from 15.0 percent to 16.8 percent, while those expecting business conditions to worsen decreased slightly, from 11.7 percent to 11.4 percent.

“Consumer confidence rebounded in June, after declining in May. Consumers were less negative about current business and labor market conditions, but only moderately more positive, suggesting no deterioration in economic conditions, but no strengthening either. Expectations regarding business and labor market conditions, as well as personal income prospects, improved moderately. Overall, consumers remain cautiously optimistic about economic growth in the short-term, stated The Conference Board Economic Indicators Director Lynn Franco.

Consumers’ outlook for labor market was more favorable in June than in May. The percentage of consumers anticipating additional creation of jobs in the coming six months increased to 14.2 percent from 12.5 percent, while those anticipating fewer jobs decreased marginally from 18.2 percent to 17.9 percent.

Even if the numbers are better than the prior month, they reflect a subdued job outlook as compared to the one seen a year ago, added Wells Fargo. Meanwhile, the data for income was quite upbeat in June. The percentage of consumers expecting incomes to rise in the coming six months rose to 18.2 percent.

“June’s improvement, however, only partially reverses the deteriorating trend in expectations for income growth seen most of this year, which once again offers some confirmation of the softer employment numbers reported in recent months,” according to Wells Fargo.