Expectations of economic growth paint a sunny picture for summer home buying with consumer confidence approaching an 18-year high.
Potential buyers positively assessed income, business and labor market conditions, raising the Customer Confidence Index to 134.1 in May from 129.2 in April.
The Present Situation Index – based on current business and labor market conditions – increased from 169.0 to 175.2. “Consumer Confidence … is now back to levels seen last Fall when the Index was hovering near 18-year highs,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The increase in the Present Situation Index was driven primarily by employment gains.”
The Expectations Index – based on short-term outlook for income, business and labor market conditions – rose from 102.7 in April to 106.6 in May. “Consumers’ sentiment regarding their income prospects was mixed,” Franco added. “Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”
The percentage stating business conditions were “good” rose marginally from 37.6% to 38.3%, while those saying business conditions are “bad” fell from 11.3% to 10.2%. Consumers’ views of the labor market were also more upbeat. The percentage of consumers stating jobs are “plentiful” gained from 46.5% to 47.2%, while those claiming jobs are “hard to get” fell from 13.3% to 10.9%.
The short-term outlook in May was more positive, as well. Consumers expecting business conditions to be better in six months gained from 19.4% to 21.9%, while those expecting business conditions will worsen fell from 9.0% to 8.4%.
On jobs, the percentage expecting more in the months ahead rose from 16.7% to 19.2%, while those expecting fewer jobs fell from 13.2% to 12.5%. On short-term income prospects, 22.6% expect an improvement, up from 21.5%. But those anticipating a decrease also gained from 6.8% to 8.2%.