Consumer confidence in June rose to its highest level in 17 months as recession concerns eased. However, spending plans were mixed. Vacation intentions continued to improve, while the intention to buy homes and big-ticket appliances cooled further due to elevated mortgage rates. This shift in consumer preference from goods to services is likely to continue this year.
The Consumer Confidence Index, reported by the Conference Board, increased 7.2 points from 102.5 to 109.7 in June, the highest level since January 2022. The Present Situation Index rose 6.4 points from 148.9 to 155.3, and the Expectation Situation Index climbed 7.8 points from 71.5 to 79.3, the highest since December 2022. However, it’s still lingering around 80 – a level associated with a recession.
Consumers’ assessment of current business conditions improved in June. The shares of respondents rating business conditions “good” rose by 4.0 percentage points to 23.7%, while those claiming business conditions “bad” fell by 0.4 percentage points to 16.3%. Meanwhile, consumers’ assessment of the labor market was also more favorable. The share of respondents reporting that jobs were “plentiful” increased by 3.5 percentage points, while those saw jobs as “hard to get” fell by 0.2 percentage points.
Consumers were marginally more optimistic about the short-term outlook. The share of respondents expecting business conditions to improve rose from 13.2% to 14.2%, while those expecting business conditions to deteriorate fell from 21.4% to 17.7%. Similarly, expectations of employment over the next six months were more positive. The share of respondents expecting “more jobs” increased by 1.7 percentage points to 15.5%, and those anticipating “fewer jobs” decreased by 5.1 percentage points to 16.0%.
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 fell slightly to 5.5% in June. The share of respondents planning to buy a newly constructed home marginally decreased to 0.5%, while for those who planning to buy an existing home declined to 2.2%.
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This article highlights the rebound in consumer confidence, which is a positive sign for the construction industry. With increased confidence, individuals may be more inclined to take on construction projects, potentially leading to higher demand for construction loans.