U.S. Consumer Confidence Drops More Than Expected In November

by Ike Obudulu Posted on November 27th, 2018

The Conference Board released a report on Tuesday showing a bigger than expected decrease in U.S. consumer confidence in the month of November – reflecting a pullback in expectations..

The Conference Board said its consumer confidence index dropped to 135.7 in November after rising to 137.9 in October. Economists had expected the index to dip to 136.5.

The bigger than expected decrease by the consumer confidence index came after it reached its highest level since September of 2000 in the previous month.

The pullback by the headline index came as the expectations index slid to 111.0 in November from 115.1 in October, indicating a decline in consumer optimism about the short-term future.

The percentage of consumers expecting business conditions to improve over the next six months fell to 22.5 percent from 26.3 percent, while those expecting conditions to worse rose to 8.8 percent from 7.2 percent.

The outlook for the labor market was somewhat mixed, as consumers expecting more jobs in the months ahead inched up to 22.8 percent from 22.3 percent but those anticipating fewer jobs also crept up to 11.1 percent from 10.6 percent.

Meanwhile, consumers’ assessment of current conditions improved slightly, with the present situation index ticking up to 172.7 in November from 171.9 in October.

Job growth was the main driver of the improvement, as consumers claiming jobs are “plentiful” rose to 46.6 percent from 45.4 percent and those claiming jobs are “hard to get” slipped to 12.2 percent from 13.4 percent.

Consumers saying business conditions are “good” edged up to 41.2 percent from 41.0 percent, but those claiming conditions are “bad” also increased to 10.9 percent from 9.4 percent.

“Overall, consumers are still quite confident that economic growth will continue at a solid pace into early 2019,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

She added, “However, if expectations soften further in the coming months, the pace of growth is likely to begin moderating.”

Last Wednesday, the University of Michigan released a separate report showing consumer sentiment unexpectedly deteriorated by more than initially estimated in the month of November.

The report said the consumer sentiment index for November was downwardly revised to 97.5 from the preliminary reading of 98.3.

Economists had expected the consumer sentiment index to be unrevised at 98.3, which was still down slightly from 98.6 in October.

Why Markets Care About Conference Board Consumer Confidence Index (CCI)

The Conference Board (CB) publishes the Consumer Confidence Index (CCI), at 10 a.m. ET on the last Tuesday of every month.

It measures Level of a composite index based on surveyed household.

The usual effect is that  ‘Actual’ greater than ‘Forecast’ is good for the dollar and vice versa.

The Consumer Confidence Index is derived   a survey of about 5,000 households which asks respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall economic situation. The Consumer Confidence Survey reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitudes and buying intentions, with data available by age, income, and region.

The Conference Board Consumer Confidence Index (CCI) is a barometer of the health of the U.S. economy from the perspective of the consumer. The index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. The Consumer Confidence Index and its related series are among the earliest sets of economic indicators available each month and are closely watched as leading indicators for the U.S. economy.

Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.

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