The Brief

The Conference Board Consumer Confidence Index® decreased to 100.4 (1985=100) in June, down from 101.3 a month prior. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased to 141.5 (1985=100) compared to 140.8 last month. Meanwhile, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – dropped to 73.0 (1985=100), down from 74.9 in May. The Expectations Index continues to sit below 80, which historically signals a recession ahead.

From stagnant wages and the unprecedented cost of living to low savings rates and less pent-up demand, experts predict consumer spending will cool further while GDP growth dips below 1% over the Q2 to Q3 2024 period.

“The weaker personal income and spending numbers, together with the downward revisions to consumption growth for the first quarter, have raised concerns that the core engine of the economy is slowing,” according to Michael Pearce, deputy chief U.S. economist at Oxford. “Consumer spending growth is moderating from last year, though we expect only a gradual slowdown at best over the second half.”

Meanwhile, businesses are caught in the limbo of tapered spending. Nationally, the seasonally adjusted Fiserv Small Business Index for June dropped to 140. On a year-over-year basis, both small business sales (+1.6%) and transactions (+4.4%) grew year-over-year; however, the pace is slowing, which is reflected in declines of small business sales (-2.9%) and transactions (-1.5%) month-over-month.

“As the quarter came to a close, consumers throttled back both spending and foot traffic across retail, restaurants and other service-based businesses,” says Prasanna Dhore, chief data officer at Fiserv. “The slowdown was driven by a combination of lower average ticket sizes – the result of abating inflation and budget-conscious consumers – and a series of short-term seasonal demand shifts.”

Nationally, small business retail sales indexed at 142 in June, which reflects growth in year-over-year sales (+2.4%) and transactions (+7.0%). General Merchandise (+8.5%), for example, outpaced all retail subsectors in yearly growth, followed by Gasoline Stations (+2.8%) and Health and Personal Care (+2.8%). Motor Vehicle and Parts Dealers (-4.1%), plus Furniture/Electronics/Appliance Retailers (-1.2%), posted a total sales decline year-over-year.

On a monthly basis, data tells a different story – the impact was more significant, as consumers sought deals and pulled-back on discretionary purchases, with month-over-month sales (-3.3%) and transactions (-0.8%) both trending downward. General Merchandise (+0.3%) was the only retail category to grow total sales from May to June.

At 91.5, the NFIB Small Business Optimism Index reached its highest reading of the year; however, the one-point increase was not enough to overcome the 30^th month below the historical average of 98.

Small business owners continue to navigate tough economic conditions, with 21% and 19% still pointing to inflation and labor, respectively, as the most important challenges in operating their business. Overall, 60% reported hiring or trying to hire. Of those surveyed, 51% (85% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill (unchanged), while 31% of owners reported few qualified applicants for open positions (up two points) and 20% reported none (down two points).

“Main Street remains pessimistic about the economy for the balance of the year,” says Bill Dunkelberg, NFIB chief economist. “Increasing compensation costs has led to higher prices all around. Meanwhile, no relief from inflation is in sight for small business owners as they prepare for the uncertain months ahead.”

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.

Top Takeaways:

Economic activity in the manufacturing sector contracted in June for the third consecutive month and the 19^th time during the last 20 months, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The Manufacturing PMI® registered 48.5% in June, down 0.2 percentage point from a month prior.
In June, the Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1% 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% before seasonal adjustment.
Total new vehicle sales for June 2024, including retail and non-retail transactions, are projected to reach between 1,336,800 and 1,273,600 units – a 2.6% to 7.2% year-over-year decrease, according to a joint forecast from J.D. Power and GlobalData.
RV wholesale shipments are projected to jump into the mid-300,000-unit range by year-end and even higher in 2025, according to the June 2024 issue of RV RoadSigns.
Powersports Business says dealers across the country reported an overall combined revenue decline of 8.4% year-over-year in May, according to composite data from more than 1,700 dealerships in the U.S. that utilize CDK Lightspeed DMS. On average, dealerships were down 14.8% in parts, 8.9% in major units and .4% in service.

KPI – July 2024: The Brief

By Pat Curtin