More than half (54%) of consumers in June were “confident” or “very confident” in the economy, a two-point bump from May and nearly 8 points higher than last year’s June reading — the most optimistic measure of June sentiment in the last 10 years, according to Prosper Insights and Analytics data reported by Forbes.
Gordon Haskett analysts' June consumer confidence measure landed at 118.9, up from 117.6 in May after declines in both May and April, according to a note emailed to Retail Dive, implying “that consumption may yet have some momentum behind it,” said Gordon Haskett analyst Chuck Grom in an email. Gordon Haskett’s June figure was the third highest since bottoming out at 25.3 in February 2009, capped off the best first half reported since then. It marked the 23rd consecutive month where consumer confidence was above of its 37-year average of 91.5; and the 30th month out of the last 31 when it was ahead of that measure.
Consumer confidence dipped 2.1% in June from May this year, a 1.7% improvement from June last year, according to the University of Michigan’s Survey of Consumers.
Midsummer 2017 is beginning at a comfortable place for retailers, at least when it comes to the economy and all-important consumer confidence. Grom called the small bump in June “a bright spot, albeit a small one, for the retail space.”
Indeed, it’s “a small one” in part because the rosier sentiment isn’t necessarily translating into spending, he warns: “[O]ur own proprietary work adds a note of caution to the publicly available sentiment data. To this end, while our May survey … showed the consumer feeling marginally better, it also revealed a reluctance to follow through and loosen the purse strings.”
The leap from confidence to spending may come later in the year, assuming that economic fundamentals stay strong. “Fortunately, increasing uncertainty about future prospects for the economy has thus far been offset by the resurgent strength in the personal financial situation of consumers,” noted University of Michigan Surveys of Consumers chief economist Richard Curtin in the report. “The combination of continuing improvements in personal finances and increasing concerns about the economic outlook is typical around cyclical peaks. Nonetheless, the data provide no indication of an imminent downturn nor do the data provide any indication of a resurgent boom in spending. Even with a much improved second quarter, personal consumption spending is expected to advance during 2017 by about 2.3%.”
Employment trends are helping. June job cuts were the lowest of the year so far, with employers announcing plans to cut payrolls by 31,105 jobs in June, according to data from outplacement consultancy Challenger, Gray & Christmas emailed to Retail Dive. The June job-cut total is 6% lower than the 33,092 cuts recorded in May, and 19.3% lower than the same month last year, when 38,536 cuts were recorded. “The pace of job cutting is significantly slower compared to the first half of last year,” according to that report. “Through the first six months of 2017, employers announced 227,000 planned job cuts, down 28% from the 313,754 cuts announced through the first half of 2016.”
Overall, labor and housing markets are in “good shape” and May personal income gained 0.4%, noted Retail Metrics president Ken Perkins in an email to Retail Dive. But, while home prices are rising, housing starts and building permit data are a bit worrisome, with starts down three straight months, he said.