WASHINGTON- US consumer confidence unexpectedly rose in October as concerns about high inflation were offset by improving labor market prospects, suggesting economic growth was picking up after a turbulent third quarter.
The survey from the Conference Board on Tuesday showed consumers eager to buy a home and big-ticket items such as motor vehicles and major household appliances over the next six months. The share of Americans planning to go on vacation was the largest since February 2020, just before the nation was slammed by the first wave of COVID-19 infections.
A resurgence in coronavirus cases over the summer, driven by the Delta variant, and supply-chain constraints related to the pandemic restrained economic activity last quarter.
“Consumers are more upbeat after a rocky third quarter and this argues for a strong finish for the economy in 2021,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Consumers know the tight labor market has their backs. Those forecasting a recession from the drop in the confidence late in the summer will have to back off that call.”
The consumer confidence index increased to a reading of 113.8 this month from 109.8 in September, ending three straight monthly declines. The measure, which places more emphasis on the labor market, remains below its peak of 128.9 in June. The rise contrasted with the University of Michigan’s survey of consumers, which showed sentiment falling early this month.
The rebound in confidence coincided with an ebb in coronavirus infections. Consumers were upbeat about both current conditions and the short-term outlook. Economists polled by Reuters had forecast that the index would dip to 108.3.
The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, raced to a reading of 45 this month, the highest in 21 years, from 43.5 in September.
This measure closely correlates to the unemployment rate in the Labor Department’s closely watched employment report.
Combined with declining new claims for unemployment benefits, it raises hopes that job gains picked up this month after employers hired the fewest workers in nine months in September. Slower job growth has been blamed on pandemic-related labor shortages.
There were 10.4 million job openings at the end of August. “This is another sign that job growth reaccelerated in October,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “It points toward a decline in the unemployment rate in October.” – Reuters
