EconoFACTS

July 27, 2021 | 11:12

Consumer Confidence Stays Hot in July

Economist

Economist
Economics

Priscilla joined BMO Capital Markets in 2016 and plays a key role in analyzing Canadian household trends and the... (Read more)

Priscilla Thiagamoorthy

Economist
Economics

Priscilla joined BMO Capital Markets in 2016 and plays a key role in analyzing Canadian household trends and the... (Read more)

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The Conference Board's consumer confidence index edged slightly higher to 129.1 in July, the highest level since February 2020 and confounding expectations for a drop. That follows an upwardly revised June reading of 128.9 and marks the sixth straight monthly gain in the face of rising price pressures (expectations on inflation a year out held at near-decade highs). Sentiment was lifted again on better views of the 'present situation' which edged up 0.7 pts to 160.3 and suggests a strong start to Q3 consumer spending. Meantime, 'expectations' six months ahead were virtually unchanged.

On the employment front, 54.9% of respondents agreed that "jobs remain plentiful”, the most since July 2000 while the share who found "jobs hard to get" held steady. On net, the labor differential improved to the best level in over two decades. This could suggest a drop in July’s jobless rate (out Aug. 6).

More consumers plan to make large purchases in the next 6 months: homes, major appliances and… autos, with the share of respondents for that category climbing 1.5 ppts to 13.1%, the most since December 2019. Those planning to make new car purchases bounced off decade lows while the share wanting to buy a used car were at two-year highs.

Bottom Line: Sentiment has continued to steadily climb with the gauge sitting at the best level since the start of the pandemic. Higher confidence suggests that consumer spending should support robust growth in the second half of this year.

Table 1 - United States — Consumer Confidence Index

(1985 = 100)

Source: BMO Economics, Haver Analytics

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