After three consecutive months of gains, consumer confidence fell to its lowest level since September 2017.
The Consumer Confidence Index, reported by the Conference Board, fell by 7.5% from 131.3 in May to 121.5 in June, as households are less optimistic about short-term economy and labor market amid trade tensions with China and Mexico. The Present Situation Index decreased 8.1 points from 170.7 to 162.6, the lowest reading since June 2018, and the Expectation Situation Index dropped 10.9 points from 105.0 to 94.1.
Both consumers’ assessment of current conditions and the short-term future weakened in June. The shares of respondents rating business conditions “good” fell by 1.7 percentage points to 36.7, and those claiming business conditions “bad” also declined by 0.8 percentage points to 10.9%. In addition to business optimism cooling, less favorable labor market conditions, following softer job growth last month, has drawn attention. The share of respondents reporting that jobs were “plentiful” decreased by 1.3 percentage points, while those saw jobs as “hard to get” increased by 4.6 percentage points, the highest since November 2017. The gap between these two shares has narrowed.
Though consumer confidence remained at a high level, the continued uncertainty, especially related to the recent escalation in trade and monetary policy may result in further volatility in the index.
The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home increased to 6.8% in June. The share of respondents planning to buy a newly constructed home declined to 0.9%, while for those who planning to buy an existing home remained unchanged at 3%. Recent gains in home purchase expectations have been driven by declines in mortgage interest rates, now averaging less than 4%.