US consumer confidence misses forecasts in June, labor market worries mount
The Conference Board's consumer confidence index rose less than expected to 91.2 in June, with a sharp rise in the share of consumers viewing jobs as hard to get, signaling labor market weakness.
The Conference Board's consumer confidence index edged up to 91.2 in June, missing the 94.8 consensus forecast, as a downward revision to May's reading offset the modest headline gain. The expectations component jumped 3.0 points to 74.4, supported by improving views on business conditions and incomes, partly driven by falling oil prices after the US-Iran ceasefire. However, the present situation index dropped 3.0 points to 116.4, and the labor market differential worsened: the share of consumers saying jobs are "hard to get" rose to 22.5%, the highest since January 2021.
For interest rate and central bank policy traders, the soft labor market reading is the key takeaway. A weakening jobs outlook could reduce consumer spending and inflation pressure, potentially giving the Federal Reserve more room to cut rates later this year. The rise in expectations, while positive, was largely tied to lower gasoline prices rather than a broad-based improvement in economic fundamentals. Bond markets are likely to focus on the labor market weakness, which may reinforce the recent flattening of the yield curve. For real-time pricing on US Treasuries and rate futures, check NowPrice's live rates page.
Looking ahead, traders will watch Friday's nonfarm payrolls report for confirmation of labor market softening. A miss on payrolls could solidify expectations for a Fed rate cut in September. Meanwhile, the next consumer confidence release in July will be scrutinized for whether the expectations improvement persists or fades as the oil price boost wanes. Any further deterioration in the present situation index would signal that households are feeling the pinch of higher borrowing costs, adding to the case for monetary easing.