U.S. consumers upbeat about short-term employment outlook, expect moderate economic growth in coming months

The U.S. consumer confidence, gauged by the Conference Board, improved further in September after rising in August. The index rose strongly to 104.1 in September from 101.8 in August. This is significantly more than consensus expectations of 99. The present situation index rose to 128.5 from 125.3, whereas the consumer expectations index rebounded to 87.8 from 86.1.

Meanwhile, the ratio of consumers stating that business conditions are “good” dropped to 27.4 percent in September from 30.3 percent. On the other hand, the ratio of the ones saying business conditions are “bad” dropped to 16.2 percent from 18.2 percent.

Household’s optimism about the short-term outlook was more favorable in September. The ratio of consumers expecting business conditions to improve in the next six months dropped to 16.5 percent from 17.6 percent. But, the ones expecting business conditions to deteriorate also fell to 10.2 percent from 11.4 percent.

Meanwhile, the outlook for the labor market came in more optimistic than in August. The ratio of consumers expecting more jobs in the coming months rose to 15.1 percent from 14.4 percent, whereas the ones expecting fewer jobs dropped to 17 percent from 17.5 percent. The labor market differential, which gauges the net share of consumers that saw employment as plentiful, rose higher to 6.3.

The data implies that consumer sentiment has totally recovered from the weak patch seen during the beginning of 2016. This improvement is constructive for the third quarter spending growth and is in line with the upward trend in consumer confidence since the weakness in spring, noted Barclays in a research report.

“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession. Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead”, stated Lynn Franco, Director of Economic Indicators at The Conference Board.