“The improvement in consumer confidence in September was a pleasant surprise, given recent uncertainty surrounding the global economic outlook and, related to that, falling U.S. equity prices,” Josh Nye, an economist with the Royal Bank of Canada writes in the bank’s consumer confidence report. “U.S. consumers seemed to have shrugged off these developments, instead focusing on the positive domestic outlook, which offers plenty of cause for optimism given a strong labor market, lower gasoline prices, and a strengthening housing market.”
Industry players have noticed increased confidence among Americans when it comes to home sales, and they hope the trend will continue.
“Consumer confidence plays a part in the home buying process, but people are still a bit shaky about the economy; and it’s not just here because we’re a global economy now,” Bill Niziolek, a loan specialist with Home Capital Network, told Mortgage Professional America Magazine. “October looks promising, though.”
The Conference Board’s U.S. consumer confidence measure rose by 1.7 points to 103 in September, up from 101.3 in August. Market expectations were for a decline to 97 points.
However, Nye says that the cut-off for preliminary results for the September confidence survey was September 17, which was prior to renewed declines in US equity prices. That suggests there’s potential for a downward revision with a final reading for September.
Still, the major bank expects strong sentiment to continue throughout the year.
“We expect these factors will continue to fuel consumer spending in the second half of 2015, thus helping to sustain an above-trend pace of US GDP growth,” Nye writes, “… we continue to expect the strong domestic outlook will trump global uncertainty and recent weakness in equity prices to leave consumer sentiment at solid levels and support continued growth in consumer spending.”
Consumer confidence in the economy is growing as the housing market and labor continue to show growing strength, according to one major Canadian bank.