U.S. Consumer Confidence Nears Expansion High

The Conference Board's Consumer Confidence Index increased 7.2% this month to 101.4 from 94.6 during May, revised from 95.4. It was the second firmest reading during the economic expansion and stronger than forecasts for 96.8 in the Action Economics Survey. During the last ten years, there has been a 45% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

The consumer expectations component improved 9.7% to 94.6 (9.5% y/y) and attained the highest level in three months. The present situations figure gained 4.2% to 111.6 (29.3% y/y), the highest level in four months. 

The percentage indicating that business conditions would get better rose to 18.5%, the highest level since January. Eighteen percent of respondents thought there would be more jobs, the most since last August. The expected inflation rate ticked up to 5.1%, its highest level in three months and 5.9% planned to buy a home, the most since November. Moving the other way, 46.5% planned to purchase a major appliance, the fewest since January.  

Respondents indicating that current business conditions were good rose to the highest level in three months. Jobs were viewed as hard to get by a reduced 25.7% of respondents, just above the recovery low of 24.6%. Jobs were viewed as not so plentiful by 52.9% of respondents, down from the high of 55.5 six months ago.

Confidence rose in the two older age groups. Those over age 55 logged a 10.5% improvement, 22.9% y/y. Respondents between the ages of 35 to 54 raised confidence by 5.4% (15.7% y/y). In the younger age bracket 1.0% fewer respondents (+10.0% y/y) were confident.   

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON and the market expectations are in AS1REPNA.

The Simulative Effect of Redistribution from the Federal Reserve Bank of San Francisco can be found here http://www.frbsf.org/economic-research/publications/economic-letter/2015/june/income-redistribution-policy-economic-stimulus/

Chicago purchasing managers reported that their June Business Barometer Index improved to 49.4 during June following an unrevised decline to 46.2 in May. It was fourth month in the last five below 50, the break-even point between rising and falling activity. It disappointed expectations for 50.0 in the Action Economics Forecast Survey. Haver Analytics constructs an ISM-Adjusted Index using the Chicago numbers, comparable to the overall ISM index to be released tomorrow. Our figure deteriorated  to 48.5, the third month below 50 this year. During the last ten years, there has been a 61% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

Deterioration in the component series was all-inclusive this month. The production series returned to nearly its lowest level of the recovery, as did the employment reading. During the last ten years, there has been an 82% correlation between the employment figure and the m/m change factory sector employment. The new orders figure fell below break-even as did vendor delivery speeds which indicated the quickest delivery speeds in just over two years. Inventories accumulated at a slightly slower rate.

The index of prices paid recovered to the highest point this year. A slightly higher 16 percent (NSA) of respondents paid higher prices but a sharply lower 10 percent reporting paying less, the least since December.

The MNI Chicago Report is produced by MNI/Deutsche Borse Group in partnership with ISM-Chicago. The survey covers a sample of over 200 purchasing professionals in the Chicago area with a monthly response rate of about 50%. The ISM-Adjusted headline index is calculated by Haver Analytics using these data to construct a figure with the ISM methodology. The figures can be found in Haver's SURVEYS database. The Consensus expectations figure is available in AS1REPNA.

The energy price data are reported by the U.S. Department of Energy. The petroleum demand and inventory figures are from the Oil & Gas Journal Weekly. These data can be found in Haver's WEEKLY database. The daily figures are in DAILY and greater detail on prices, demand and production, along with regional breakdowns, are in OILWKLY.