Better job prospects and cheaper gasoline could be putting consumers in a better mood for shopping as the second half of the retail year gets under way.
On Tuesday, The Conference Board’s Consumer Confidence Index rose for the fourth consecutive month, to its highest level since October 2007, while the International Council of Shopping Centers and Goldman Sachs’ chain-store sales index rose on a year-over-year and week-on-week basis for just the second time in four weeks.
The Consumer Confidence Index is at 92.4, up from 90.3 in July, as the Present Situation Index rose to 94.6 from 87.9 while the more forward-looking Expectations Index dipped to 90.9 from 91.9 last month.
The positive news on the consumer front helped the S&P 500 record its first close above 2,000, although just barely, as it rose 0.1 percent to 2,000.02 after briefly topping the 2,000 mark in midday trading Monday. The S&P 500 Retailing Industry Group subset rose 0.4 percent to 955.93.
Lynn Franco, director of economic indicators at The Conference Board, said confidence increased as “improving business conditions and robust job growth helped boost consumers’ spirits.”
In their appraisal of current conditions, those who said business conditions were good inched up to 23.9 percent from 23.3 percent, while those who said jobs are “plentiful” rose to 18.2 percent from 15.6 percent.
Respondents to the survey weren’t as optimistic about the outlook for the next six months. The percentage who said they expect business conditions to improve over that span was flat at 20.4 percent. On the labor front, the reaction was mixed. While those who anticipate more jobs in the months ahead fell to 17 percent from 18.7 percent, the respondents who said they expect fewer jobs in the same period also fell, to 15.8 percent from 16.6 percent.
“The August consumer confidence increase was driven by higher levels of optimism on current economic circumstances, especially concerning job prospects,” said Chris Christopher Jr., director of consumer economics at IHS Global Insight.
Lower prices at the pump also contributed to a 4.2 percent gain in chain-store sales last week, according to the ICSC and Goldman Sachs’ weekly survey of chain-store sales.
The pickup in sales for the week ended Saturday was accompanied by a 0.6 percent sales gain in comparison to the prior week. The last time both comparisons had risen was for the week ended Aug. 2, when year-over-year sales rose 4.5 percent while sequential sales increased 0.2 percent. That matched the sequential increase of the prior week, when year-over-year sales were up 4.6 percent.
Michael Niemira, research consultant for ICSC, said sales were strong “across the board, especially for wholesale clubs, apparel stores, discounters, dollars stores and furniture stores” during a period dominated by back-to-school shopping.
“I expect sales for August to show a healthy gain of 4 to 5 percent, a notable improvement over the 3.6 percent gain in August 2013,” he added.
Citing figures from the U.S. Energy Information Administration, ICSC said consumer spending power was lifted by a drop in gasoline prices, 2.8 percent lower than in the comparable week of last year.
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