US Confidence Plunges on COVID Rebound

The Conference Board’s US consumer confidence index fell to a reading of 92.6 in July from an upward revised 98.3 reading in June, with concerns about the resurgence of COVID-19 cases cited by Conference Board. Analysts had expected the July index to fall to 95.7 from the originally reported 98.1 reading in June. The index was at 132.6 in February before the state shutdowns began.

The present situation reading rose to 94.2 from 86.7, but the expectations reading fell to 91.5 from 106.1.

Lynn Franco, the Conference Board’s senior director of economic indicators, says, “Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19. Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labour market and remain subdued about their financial prospects.”

The assessments of current business and employment conditions both improved modestly in July.

The percentage of respondents describing current business conditions as “good” ticked down to 17.3% from 17.4% in June, while those reporting they were “bad” fell more sharply to 39.1% from 42.5%.

Those reporting jobs as “plentiful” rose to 21.3% from 20.5%, while those reporting that they are “hard to get” fell to 20.0% from 23.3%. As a result, the gap between the two jobs measures, a closely watched indicator of employment conditions, improved to +1.3 in July from -2.8 in June. By comparison, the gap stood at +33.1 a year ago.

While current assessments improved, the outlook for conditions deteriorated drastically. Respondents looking for business conditions to improve over the next six months fell to 31.6% from 42.4%, compared with 19.3% who expect conditions to worsen, up from 15.2%. Those expecting more jobs in the coming months fell to 30.6% from 38.4% in June, while those looking for fewer jobs jumped to 20.3% from 14.4%.

In other data released on Tuesday, the Richmond Fed’s conditions measures showed an increase in the headline manufacturing index to 10 in July from 0 in June. The regional data released to this point for July, as well as the Markit flash estimate, suggest a further improvement in the national ISM manufacturing index released on next Monday, however, the Dallas Fed and Richmond Fed services data released on Tuesday point to continued contraction for the nonmanufacturing sectors ahead of next week’s ISM services reading.

The Markit flash estimate for services indicated conditions were roughly unchanged, but the regional data were more pessimistic, especially in regions that are experiencing a rebound of COVID-19 cases like Texas.


Colin Lambert

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