There were two important reports on the U.S. economy released this morning. First, the consumer confidence index from The Conference Board jumped to 104.1 in September. That was significantly better than expected, the second monthly increase in a row, and the highest headline reading in nine years. Optimism about current economic conditions improved markedly in September, with 30.3 percent of consumer respondents stating that business conditions are “good,” and 27.9 percent claiming that jobs are "plentiful." In fact, the percentage of surveyed consumers describing jobs as “plentiful” less the percentage reporting jobs as “hard to get” climbed to the best reading of the recovery this month. That could signal a decline in the unemployment rate in coming months, which would help officials at the Federal Reserve justify an interest rate hike in December. Americans’ outlooks for the near-future also firmed in September, with 15.1 percent of respondents expecting jobs to be more plentiful six months from now. However, slightly fewer consumers anticipate that business conditions (16.5 percent) and wages (17.1 percent) will improve over the next half a year. Lynn Franco, Director of Economic Indicators at The Conference Board, added that “Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”
Elsewhere, a report from the Federal Reserve Bank of Richmond showed that manufacturing activity in the Mid-Atlantic region of the country rebounded this month, albeit just barely. Specifically, the composite index lifted from -11.0 to -8.0 in September, a welcome improvement from the 3-year low hit in August but still worse than expected and the 3rd negative (contractionary) reading in the past four months. Under the hood, measures of shipments, new order volumes, and capacity utilization all rose in September but remained in sub-zero territory. Further, the gauges of total employment and worker compensation fell sharply this month, and expectations for general activity and capital expenditures six months from now deteriorated. Altogether, this was the final report on regional manufacturing activity in America released for September and every Fed index improved this month but the majority continued to signal contraction, meaning that it is still too early to tell whether the “industrial recession” in America has finally ended.
Sources: Econoday, Twitter, Bloomberg, ZH, Advisor Perspectives, The Conference Board, Haver Analytics, Renaissance Macro, FRBR, FRBSLPost author: Charles Couch