United States: Consumer confidence hits 17-year high in November
November 28, 2017
The Conference Board’s monthly consumer confidence index continued to trend higher in November, logging a fifth consecutive month of stronger confidence. The index increased from 126.2 in October to 129.5 points in November, comfortably surpassing market expectations of a small dip to 124.5. The figure was also the highest since November 2000. As a result, the index is now further above the 100-point threshold that separates optimism from pessimism among consumers.
Improvements were observed across components in November. Consumers’ assessment of current conditions improved from the previous month. The percentage of respondents stating that business conditions were good increased, and the percentage noting downbeat conditions decreased. Similarly, consumers were more upbeat regarding the labor market. The labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—widened substantially from an already-elevated 19.6 in October to 20.2 in November.
Consumers’ view on the near-term outlook was also more upbeat in November. The percentage of consumers expecting business conditions to improve over the next six months rose 0.3 percentage points to 22.4 percent, while the percentage that expected conditions to deteriorate decreased from 7.0 percent to 6.5 percent. Consumers’ upbeat assessment was largely driven by improving prospects in the labor market. The income differential, however, shrank mildly in November from October’s value, likely reflecting subdued wage growth.
November’s reading confirms that consumer optimism remains elevated in the fourth quarter, which is likely to translate into higher consumer spending going into the year-end holidays. In a similar vein, upbeat labor figures point to a strong outturn in employment growth in November, which would further fuel market expectations of a final interest rate hike at the Federal Reserve’s December monetary policy meeting.
Author: David Ampudia, Economist