Consumer confidence is at historically high levels across the world’s leading economies even as clouds gather over the global economic outlook, according to a newly-published data series.
Manufacturing output is falling in many of the world’s leading economies while services and trade growth are slowing, but the figures from the Conference Board, the US business organisation, and Nielsen, the data analytics company, suggest that some of the foundations of global prospects are still holding firm.
“There is an unprecedentedly large gap between strong consumer confidence and business confidence, which has been hit by the trade war and manufacturing downturn,” said Bart van Ark, chief economist at the Conference Board. “Consumers do not care so much so long as [trade tensions] do not affect their jobs.”
The Conference Board’s global index stood at 107 in the third quarter of 2019, a high for the series, and the same reading as in the second quarter, suggesting a positive outlook for household spending over the next six months, according to Mr van Ark.
The figures come ahead of next week’s annual meetings of the IMF and World Bank, when the IMF is set to downgrade its economic outlook significantly. But they demonstrate why the world economy is not showing deep recessionary signs yet — households are still feeling confident about their jobs and incomes.
The buoyancy of consumers’ views of their job prospects, personal finances and willingness to spend suggests that household consumption will remain firm in most large economies even as manufacturing and trade stagnates.
However the best may be over — consumer confidence has plateaued and is beginning to drop in a growing number of countries, the data series shows. There was a decline in confidence in 33 of the 64 economies measured by a bespoke survey, and an increase in 29 economies.
There was particular strength in the US and across most Asian economies with Europe lagging a little behind.
Political uncertainty had clear effects in some economies with Hong Kong’s confidence falling 14 points to 86 in the third quarter, an equivalent decline in Peru, while Greece enjoyed a 12 point rise on the back of the greater stability that accompanied the new government.
The UK and Germany saw small increases in consumer confidence despite concerns over Brexit.
When asked about their greatest concerns, households cited the global outlook and their job prospects, suggesting that the high levels of confidence might be fragile if a manufacturing downturn gathered pace.
A growing number of central banks are loosening monetary policy to stimulate spending; the global consumer confidence data suggest that easing will be most effective if it encourages businesses to raise investment spending to improve efficiency and future output, rather than encouraging households to save less and spend more.
The survey was based on responses from 32,000 people online in 64 countries, with 500 surveyed in each.