Commentary

Consumers Feeling a Bit Better Globally But The Buts Abound

Consumer confidence in the United States improved modestly through mid-May after having declined sharply in April and reversing a three-month slide, according to The Conference Board Consumer Confidence Index, which is conducted by Nielsen.

The index of consumer attitudes rose to 95.4 from a downwardly revised 94.3 in April. Economists polled by Reuters expected slightly better results — 94.9 — according to a Reuters’ Daniel Bases. Those polled by the Wall Street Journal, however, “had forecast the latest index to be little changed at 95.0,” writes the WSJ’s Kathleen Madigan.

“This moderate firming in confidence is a positive, suggesting that consumers are looking beyond the soft first quarter and believe that conditions have stabilized,” Plante Moran Financial Advisors CFO Jim Baird wrote in a research note, Madigan reports.

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The so-called Present Situation Index rose from 105.1 in April to 108.1. The boost was “propelled by a more positive assessment of the labor market,” according to Lynn Franco, director of economic indicators at The Conference Board. But, she warned, “consumers still remain cautious about the short-term outlook.”

Indeed, the Expectations Index declined to 86.9 from 87.1 in April.

On the job front, “North Dakota is the only state in the country where the jobless rate was significantly higher in April than it was a year earlier, highlighting the impact of plunging oil prices in energy-rich states,” Kate Davidson reports for the Wall Street Journal. Still and all, it’s coming off a flush base, with only 3.1% of its residents unemployed, according to yesterday’s news release from the U.S. Labor Dept.’s Bureau of Labor Statistics.

Overall, the national jobless rate was essentially unchanged from March at 5.4% and was 0.8% lower than in April 2014 with 23 states and the District of Columbia showing unemployment rate decreases from March, 11 states with increases, and 16 with no change. The largest over-the-month decrease in employment occurred in New York (minus 14,700). Forty-five states and D.C. had unemployment rate decreases from a year earlier; five states had increases. 

Consumers were generally feeling more chipper globally as well. 

In the United Kingdom, the “Consumer Confidence Index hit 97 in the first quarter of this year, the highest point since it reached 101 in the first quarter of 2006 when Tony Blair was in his third term as Prime Minister,” Josie Clarke reports in the Belfast Telegraph. “Consumer positivity about job prospects increased for the eighth consecutive quarter.”

According to Nielsen UK managing director Steve Smith, the UK “is one of the fastest-growing major economies, unemployment is falling and people are benefiting from zero inflation and lower prices in supermarkets and petrol stations.” 

Writes the Guardian’s Katie Allen: “Economists said it appeared for now that the UK was experiencing ‘good’ deflation that was boosting spending, rather than prompting people to put off purchases in the hope of lower prices in the future.”

Still, since the Consumer Confidence Index is hovering below 100, “the overall mindset of the UK consumers is still deemed ‘pessimistic,’” Ben Bold reports in Marketing.

Consumer confidence in Asia-Pacific increased in nine of 14 markets in the first quarter of 2015, compared to only three that rose in the fourth-quarter 2014, according to the Nielsen Global Survey of Consumer Confidence and Spending Intentions,” report the editors at Retail Tech Innovation. 

“India, whose confidence level has been on the rise for six consecutive quarters, had the highest index score in the region of 130, a one-point increase from the previous quarter.” Taiwan and Japan also had positive results, as did Vietnam and Malaysia. “Conversely, China’s index fell one point to 106 in the first quarter, which comes after a four-point decline in fourth-quarter 2014,” according to Retail Tech Innovation.

Meanwhile, “German consumer confidence hit a 13.5-year high, as low inflation and a bright economic outlook spurred spendthrift in Europe's biggest economy,” according to a story on the German website DW. “That is the highest level since October 2001,” reports GfK, the market research company that conducted the poll. “The consumer climate in Germany remains in a moderate uptrend.” 

Then again: “But we mustn't lose sight of the ongoing risks: the difficult talks about Greece's future in the eurozone, the Ukraine crisis and Islamic State terror could seriously dampen consumer spending in Germany,” the GfK commentary points out.

Not to mention the corruption charges yesterday revolving around the world’s No 1 sport, right? Not really.

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