The Conference Board Consumer Confidence Index® increased to 117.0 (1985=100) in July, up from 110.1 a month ago. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved to 160.0 (1985=100) from 155.3 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved to 88.3 (1985=100) from 80.0 in June. Noteworthy, Expectations climbed well above 80, a level which historically signals a recession within the next year. Despite rising interest rates, data shows consumers are more “upbeat” compared to recent months.
Similarly, the University of Michigan Survey of Consumers – a survey consisting of approximately 50 core questions covering consumers’ assessments of their personal financial situation, buying attitudes and overall economic conditions – registered 71.6 in July, up 11% from the month prior.
“Overall, the sharp rise in sentiment was largely attributable to the continued slowdown in inflation, along with stability in labor markets,” according to Joanne Hsu, director at Survey of Consumers.
While consumers are more optimistic about the economy, they are spending more cautiously. Employment and household disposable income growth are expected to moderate in the second half of the year. As such, the slowdown in consumer spending will accelerate as the buffer from excess savings shrinks, student loan repayments restart and credit conditions tighten further, notes Lydia Boussour, senior economist at EY-Parthenon.
According to the current NFIB Small Business Optimism Index, 21% of owners still point to inflation as the single most important problem in operating their business.
In addition, approximately 61% of owners reported hiring or trying to hire in July, yet 92% confirmed few or no qualified applicants for the positions they were trying to fill.
“With small business owners’ views about future sales growth and business conditions dismal, owners want to hire and make money now from solid consumer spending,” says Bill Dunkelberg, NFIB chief economist. “Inflation has eased slightly on Main Street, but difficulty hiring remains a top business concern.”
Professionals in the automotive, RV and powersports industries remain steadfast in their efforts to evolve their business models and grow their brands in the face of adversity. As such, the monthly Key Performance Indicator Report serves as an objective wellness check on the overall health of our nation, from the state of manufacturing and vehicle sales to current economic conditions and consumer trends. Below are a few key data points explained in further detail throughout the report:
Current Top Takeaways:
- Economic activity in the manufacturing sector contracted for the ninth consecutive month following a 28-month period of growth, according to the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The July Manufacturing PMI® registered 46.4%, 0.4 percentage point higher than a month prior.
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2% on a seasonally adjusted basis, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index increased 3.2% before seasonal adjustment.
- While the NFIB Small Business Optimism Index increased slightly to 91.9, it marks the 19th consecutive month below the 49-year average of 98.
- Total new-vehicle sales in July, including retail and non-retail transactions, are projected to reach 1,320,982 units – a 21.5% year-over-year increase, according to a joint forecast from J.D. Power and GlobalData.
- Powersports Business says dealers across the country reported an overall revenue growth of 4.9% in June, according to composite data from more than 1,700 dealerships in the U.S. that utilize CDK Lightspeed DMS. On average, dealerships posted a growth of 5.2% in new and pre-owned sales.