Consumer confidence surpassed expectations this month as the annual inflation outlook edged higher, as reported by the Conference Board on Tuesday. The consumer confidence index surged to 108.7 in October from an upwardly revised 99.2 in September, outpacing the consensus of 99.5 on Bloomberg. "Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years," commented Conference Board Chief Economist Dana Peterson. All five components of the index showed improvement, with consumers’ evaluations of current business conditions turning positive.
Job availability rebounded after several months of weakness, possibly reflecting enhanced labor market data, Peterson noted. The present situation index increased by 14.2 points to 138 this month, while the expectations measure rose 6.3 points to 89.1. The expectations metric stood well above the threshold of 80, which typically indicates a recession, according to the Conference Board. "Compared to last month, consumers were significantly more optimistic about future business conditions and maintained a positive outlook on future income," Peterson stated.
"Additionally, for the first time since July 2023, they exhibited cautious optimism regarding future job availability." The ratio of individuals anticipating a recession over the next year dropped to its lowest level since the Conference Board initiated the question in July 2022, Peterson revealed. Average 12-month inflation expectations increased to 5.3% this month from the previous month's reading of 5.2%.
This rise occurred despite a further slowdown in overall inflation and declines in gas prices, possibly indicative of upward pressure on food and service prices, the report highlighted. On a six-month moving average basis, purchasing plans for homes and new cars rose, while consumers demonstrated a slightly greater preference for durable goods purchases.
Plans to dine out and book hotel stays also saw significant increases in October, according to the report..