The forward-looking German GfK consumer confidence index improved less than expected to -7.0 in June from revised -8.6 in May. The economic expectations indicator rose to 41.1 points, from 34, the highest value in over three years. The income expectations indicator rose 10.2 points to 19.5 in May. After three rises in a row, the propensity to buy indicator dropped 7.3 points to 10.0.Germany is exiting from the COVID-19 third wave, and the incidences have been falling significantly for weeks. Germany is also making great strides in vaccination. As a result, openings and a departure from strict lockdown are becoming possible.
The French manufacturing sentiment index rose to 107 in May from 104 in April. This was the highest score since August 2018, when the reading was 109. Manufacturers were more confident about their personal production prospects, as the general production expectations index rose sharply to 18 from three, registering its highest point since the spring of 2018. The balance concerning activity over the last three months has been virtually stable at a high level, close to that of the beginning of 2018.
The manufacturers’ opinion on the level of order books further improved with the balance on overall order books rising to -10 from -15 in the previous month. The balance on foreign order books continued to increase in May. The corresponding gauge climbed to -18 from -22. The overall business confidence index that comprises the responses of business leaders in manufacturing, construction, services, retail trade and wholesale trade, improved in May. At 108, the index has returned above its long-term average of 100, for the first time since February 2020, and was even higher than before the COVID crisis.
The Conference Board reported that its US consumer confidence index edged down to 117.2 in May after climbing to a revised 117.5 in April. This index had rebounded sharply in recent months. Reflecting consumers’ improved appraisal of current conditions, the present situation index jumped to 144.3 in May from 131.9 in April. Consumers’ assessment of the labour market also improved, as those saying jobs are “plentiful” spiked to 46.8 per cent from 36.3 per cent and those claiming jobs are “hard to get” dipped to 12.2 per cent from 14.7 per cent.
Meanwhile, the Conference Board said the expectations index dropped to 99.1 in May from 107.9 in April, as consumers’ optimism about the short-term outlook waned. The percentage of consumers expecting business conditions to improve over the next six months slipped to 30.3 per cent from 33.1 per cent, while the proportion expecting conditions to worsen rose to 14.8 per cent from 12.1 per cent. Consumers were also less upbeat about the job market, with those expecting more jobs in the months ahead slumping to 27.2 per cent from 31.7 per cent and those anticipating fewer jobs climbing to 17.3 per cent from 14.4 per cent. It is expected that overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases fall further and the economy fully reopens.
This report was prepared by Bank of Valletta plc for general information purposes only.