The Conference Board’s consumer confidence report for November is due out later today.
The median estimates point to a modest increase to 126.9 on the index. This is slightly higher than October’s reading of 125.9.
The US consumer confidence index remains at high levels despite the decline in the month before. The reading fell for the second consecutive month in October, following the declines in September.
But, in October, the current situation index rose slightly higher from 170.6 to 172.3. This indicates that despite the decline, consumers were still optimistic about the current situation.
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The previous report came during the month when the Fed cut interest rates. There were widespread concerns about the economy. The US third-quarter GDP was weaker, rising at a pace of just 1.9%.
The concerns in the economy spread to the consumer side as well. The US labor market was stagnating with the pace of jobs created slowing steadily. Yet, despite the weakness in the headline figures, the labor market conditions continue to remain robust.
The trade war was also another major factor in the report for October. But this had little impact. Back in October, there was some optimism that the US and China would agree to a trade deal.
The expectations came as investors and consumes were also hoping that both countries would clinch a trade deal by November. Overall, the economy was seen to be relatively stable with no major threats to growth at that point.
Will the Index Rise as Expected in November?
November was relatively stable on most fronts. The main narrative during the month was the renewed uncertainty of the trade wars. The US administration threatened that it would raise tariffs on China if a deal was not made.
This effectively puts the December 15th deadline into focus. Failure to reach a deal could once again see another round of tariff hikes, possibly from both fronts. This would further put the deal out of reach from both parties.
Equity markets have been following the developments closely and a no-deal with China could probably put some pressure on the markets.
Furthermore, with the Federal Reserve noting that it was done with rate cuts, having a no-deal with China could probably hurt global trade even further.
As a result, investors are likely to remain somewhat cautious during the month.
So far, the early economic indicators show that growth is continuing. However, it is unlikely to see the growth rates logged in the earlier quarters of this year.
Therefore, it is possible that the consumer confidence index will rise as per expectations. At the very least, we expect to see a modest increase from October. This would mean that the consumer confidence index will have likely recovered after falling for two consecutive months.
Will the Report Impact the Markets?
The report in isolation is unlikely to garner much of a reaction. However, as long as the monthly readings are within the acceptable deviation levels, traders will brush aside the data.
An unexpected decline or even an increase could, however, see the markets repricing the data.
Given that it is a short week ahead, investors will be more focused on the data coming out ahead of the Thanksgiving holiday. This includes the core PCE data, the revised GDP numbers, and the durable goods orders.
Thus, we could expect to see some reaction closer to the main data dump than the CB consumer confidence report alone.