Consumer optimism received much needed boost in May in hopes of trade peace between the US and China, according to a survey on Tuesday.
The Conference Committee’s Consumer Trust Index jumped to 98.0, up 12.3 points from April, far better than the Dow Jones Consensus estimate of 86.0.
According to board officials, much of the positive sentiment came from the development of a deadlock in US-China trade. Most notably, President Donald Trump, in particular, stopped the strictest tariffs on May 12th.
“The rebound was already visible before the US-China trade agreement on May 12, but it gained momentum since then,” said Stephanie Gichard, senior economist at Global Indicators for the Conference Committee.
The rebound in May followed a straight decline in five months. Consumers and investors have become sour to the economic outlook as they achieved certain goals with China amid the fierce trade war Trump launched against US global trading partners.
However, both sides reached a ceasefire in early May and marked the second major walkback of Trump’s so-called mutual tariffs as they collected them in the announcement of the “liberation date” on April 2nd.
Other board sentiment indicators have also increased.
The current situation index rose to 135.9, an increase of 4.8 points, while the expected index recorded a huge surge to 72.8, a profit of 17.4 points. Investors also show more optimism, with 44% expecting stocks to rise in the next 12 months, up 6.4 percentage points from April.
The labour market view has also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared to 13.9% in April. At the same time, we expect fewer jobs to fall from 32.4% by 26.6%. However, the level of respondents saying jobs are “abundance” came to just 31.8%, while employment rose to 18.6% for “difficult” and increased by 1.1 percentage points.
Research officials point out that the “most powerful improvement” came from Republicans, but said sentiment improved through age, income and political affiliation.
