US Conference Board June Consumer Confidence: Modest improvement

They near universal closure of the US economy in April and firing of upwards of 35 million people by the end of the month drove consumer sentiment into its steepest decline in history.  Sharp but short-lived, as confidence and consumption began their recovery the next month.

Conference Board consumer confidence is expected to rise to 91.6 in June from 86.6 in May.  The plunge from 132.6 in February to 85.7 in April was the largest two-month drop in the 53 year series.

The Michigan consumer sentiment index rose to 78.1 in June from 72.3 in May and 71.8 in April

Consumption in May

Hard numbers from May in retail sales, durable goods and personal spending confirm the April bottom and subsequent reversal. Retail sales plummeted 14.7% in April, by far the largest one month decline on record and then surged 17.7% in May, more than double its 8% estimate.  

Retail sales

Durable goods, a subset of sales fell 18.1% in April and rebounded 15.8% in May, besting the 10.9% prediction.  Non-defense capital goods the business investment proxy, dropped 6.5% in April, rising 2.5% in May, much more than the 1% projection.  Personal spending rose 8.2% in May following the 12.6% April tumble and was the only consumption gauge to miss its forecast at 9%.  

Labor Market

Non-farm payrolls added 2.5 million jobs in May an enormous 10.5 swing from the 8 million decline expected. The ADP private payrolls loss at 2.76 million was less than a third of the 9 million predicted.

Further improvement is anticipated in June with NFP and ADP forecast to add 3 million jobs each.

Markets

The rise in virus cases in many states has prompted a mild degree of risk-aversion in currencies. The dollar is moderately higher in all major pairs over the last two weeks. 

Equities have had alternating bouts of worry and hope leaving the major averages within points of their positions on June 15.  

While no states have ordered widespread business closures, Texas Governor Abbot shuttered bars on Monday a month after permitting them to open saying that they were one of the sources of the increase in new cases and other states have slowed their opening schedules.

With lockdowns at an end across the country the return to employment in June is probably more widespread than anticipated. The risk to the jobs numbers and consumer sentiment is on the upside though better than expected numbers will not be enough to ally all the pandemic fears.