U.S. Consumer Confidence Index
Previously, we discussed how the US job market is shaping up. In this part, we’ll look at the U.S. Consumer Confidence Index. The data, compiled by the University of Michigan and Thomson Reuters, are reported on a monthly basis. The Survey Research Center conducts the underlying survey, which consists of at least 500 telephone interviews with a cross section of consumers in the continental United States (VTI).
Consumer confidence rises
The above chart shows the latest trends in the U.S. Consumer Confidence Index. As you can see, the index has been on an uptrend, hitting 95.5 in April. This is the second highest reading since 2007. This is the fifth straight month the Consumer Confidence Index has been above 90. The index was last above 90 in July 2007.
Positive for automobile industry
A higher Consumer Confidence Index is positive for US vehicle sales. An increase in the index is one of the possible reasons behind the uptrend in vehicle sales. Analysts expect US vehicle sales to top the seasonally adjusted annual rate (or SAAR) of 17 million this year, the highest in a decade.
General Motors (GM) and Ford get more than 60% of their revenues from the North American market. North America is also the most important market for Honda (HMC). The region contributes ~45% of its revenues. An increase in the U.S. Consumer Confidence Index is positive for these companies.
Prevailing interest rates on new automobile loans also impact automobile companies. In the next part, we’ll look at interest rates in detail.