Consumer Confidence Stays Shaky in US and Germany

Four new studies out this week reflect mixed feelings about the economy among consumers and business owners. Overall, the trend is downwards with decreases in the US Consumer Confidence Index and GfK's Consumer Climate Index for Germany.

The US Conference Board's Consumer Confidence Index, which had increased in June, dipped in July. The Index now stands at 103.2, down from 106.2 in June. The Present Situation Index decreased to 118.5 from 120.8 and the Expectations Index declined to 93 from 96.4.

The Board's Consumer Confidence survey, conducted by TNS NFO with a representative sample of 5,000 US households, found consumers unsure about the jobs market. The proportion believing that 'jobs are plentiful' remains static at 22.5% while the percentage thinking they are 'hard to get' rose from 22.5% to 23.8%. The proportion of people expecting a pay rise in the months ahead declined to 18.6% from 19.9%. Those anticipating business conditions to improve also declined - from 19.5% to 17.6% - while those expecting them to worsen edged up to 9.6% from 9%.

Lynn Franco, Director of The Conference Board's Consumer Research Center, believes the decline is no cause for concern, stating that 'the overall state of the economy remains healthy and consumers' outlook suggests no storm clouds on the short-term horizon. Even the steady upward tick of fuel prices at the pump has done relatively little to dampen consumers' spirits.'

Small Businesses More Confident
Meanwhile, US small business owners' confidence is higher than that of the general population, according to SAM'S Club Small Business Confidence survey, conducted by BIGResearch. The study found that 45.9% of the 1,200 small business owners and managers surveyed were confident about chances for a strong economy over the next six months - a fall of 3.6 points since June. However, this drop was not reflected in views on the US employment environment. 57.5% felt that employment levels will remain the same over the next six months, up slightly (two-tenths of a point) from last month.

Manufacturing Job Growth Slows
A further US study - the Leading Indicator of National Employment (LINE) from the Society for Human Resource Management (SHRM) and Rutgers University - adds to the complex picture. It found that manufacturing job growth slowed in July but employers are having difficulty finding skilled applicants to fill key positions.

Consumer Climate Remains Cool in Germany
The latest GfK Consumer Climate Survey finds an uncertain mood among German consumers, too. Expectations regarding economic development and personal financial futures are low, and consumers are not expecting an economic upturn.

At -15.7 points, the economic outlook indicator for July is a good two points below the previous month. For more than a year, this indicator has been fluctuating, generally between -15 and -20. The income expectations indicator has declined through the year to -14.8 points - the same as the previous year's level.

By contrast, the propensity to buy indicator rose to -13.1 points in July this year. The increase of almost 13 per cent was almost sufficient to recover from the drop in the second quarter of this year. Despite this increase, though, the overall consumer climate indicator is down for the fourth consecutive time.

According to GfK: 'How consumption will develop towards the end of the year will largely depend whether parties battling for an election victory succeed in making convincing statements about how they plan to improve the economy and employment. If oil prices then settle at a reasonable level, growth in private consumption of 0.4 per cent would once again become a realistic expectation.'

The Conference Board is online at www.conferenceboard.org , SAM'S Club - a division of Wal-Mart - is at www.samsclub.com , and BIGResearch is at www.bigresearch.com . More details of the SHRM survey are at www.shrm.org/LINE . The GfK group web site is www.gfk.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.