Consumer optimism got a much-needed boost in May on hopes for trade peace between the U.S. and China, according to a survey Tuesday.
The Conference Board’s Consumer Confidence Index leaped to 98.0, a 12.3-point increase from April and much better than the Dow Jones consensus estimate for 86.0.
Much of the positive sentiment, according to board officials, came from developments in the U.S.-China trade impasse, most notably President Donald Trump‘s halting of the most severe tariffs on May 12.
“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, the Conference Board’s senior economist for global indicators.
May’s rebound followed five straight months of declines. Consumers and investors had grown sour on economic prospects amid the intensifying trade war that Trump has launched against U.S. global trading partners, with China a particular target.
However, the two sides reached a truce in early May, marking the second major walk-back of Trump’s so-called reciprocal tariffs since he levied them in his April 2 “liberation day” announcement.
Other board sentiment indicators also increased.
The present situation index increased to 135.9, up 4.8 points, and the expectations index posted a major surge to 72.8, a 17.4-point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.
Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared with 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%. However, the level of respondents saying jobs were “plentiful” edged higher to just 31.8%, while those saying employment was “hard to get” increased to 18.6%, up 1.1 percentage points.
Survey officials said sentiment improved across age, income and political affiliation, though noting that the “strongest improvements” came from Republicans.
(Source)