The Conference Board recently released data showing that the U.S. consumer confidence index rose to 91.2 in June, up slightly by 0.6 points from May’s downwardly revised 90.6, though still remaining at a low level overall. The subcomponents composing the index showed divergence: the present situation index, which measures current business and labor market conditions, fell 3.0 points to 116.4, while the expectations index, which reflects consumer expectations for income, business, and labor market conditions over the next six months, rose 3.0 points to 74.4.
Dana M. Peterson, Chief Economist at The Conference Board, pointed out that the recent pullback in oil prices alleviated consumer concerns about inflation, which was the primary reason for the modest improvement in confidence. However, consumers’ assessment of the current labor market weakened notably, with the proportion of those saying “jobs are hard to get” rising to 22.5%, the highest level since January 2021, when that figure stood at 22.8%. At the same time, the share of consumers expecting improvements in business conditions and income prospects over the next six months increased, partly offsetting the negative sentiment regarding employment.
In terms of specific assessments, the percentage of respondents viewing current business conditions as “good” edged up to 20.0%, while those viewing them as “bad” fell to 16.5%. However, the labor market differential—the difference between those saying jobs are plentiful and those saying jobs are hard to get—fell to 2.4 percentage points, down 2.6 percentage points from the previous month. On the expectations front, the proportion expecting business conditions to improve over the next six months stood at 19.0%, up slightly from the prior reading; the share expecting more job opportunities fell to 15.2%, while the proportion expecting higher incomes rose to 20.8%.
The report also showed that the frequency of mentions of prices and gasoline costs in consumers’ written responses declined, while references to geopolitical conflicts also diminished. On inflation expectations, both the average and median inflation expectations for the next 12 months fell from the prior readings, though 61.5% of respondents still expected interest rates to rise. Affected by the extension of the ceasefire agreement between the United States and Iran during the latter half of the survey period, consumers’ expectations for stock price increases over the coming year strengthened. On household finances, the net assessment of current financial conditions deteriorated for the third consecutive month, but the outlook for future financial conditions rebounded to the level seen at the start of the year. On recession expectations, the proportion expecting a recession “likely” over the next year rose, though overall expectations remained at a low level.
On the spending plans front, the willingness to purchase big-ticket items over the next six months improved modestly, while car purchase plans continued to rise on a moving-average basis, and homebuying expectations also improved. Among specific goods, furniture and smartphones remained the most desired categories, though the intensity of interest continued to cool. On services spending, more consumers shifted toward increased expenditure, with restaurant takeout, streaming services, and personal care being the main areas of focus; overall travel intentions declined due to fewer domestic travel plans, though expectations for international travel and transportation and accommodation spending rose moderately.
On the labor market front, the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Bureau of Labor Statistics on the same day showed that the number of job openings rose slightly to 7.59 million in May, above the market expectation of 7.30 million, while the prior month’s figure was also revised upward. Openings increased in construction and leisure and hospitality, held steady in professional and business services, while openings in the financial activities sector continued to decline, with this industry having persistently weighed on job growth so far this year. The quit rate held steady at 1.9%, and while layoffs increased slightly, hiring remained flat. The ratio of job openings per unemployed person, a metric closely watched by the Federal Reserve, held at roughly 1:1, indicating that supply and demand are trending toward balance.
Market attention has now turned to the June nonfarm payrolls report due on Thursday, with economists projecting approximately 110,000 new jobs added. Meanwhile, data from the job site Indeed showed that the job-posting index recorded its largest two-week gain so far this year in mid-June, though overall hiring activity remained moderate.
