The present situation index for the country—based on consumers’ assessment of current business and labour market conditions—declined to 133.6 in July from 135.3 in the preceding month.

The expectations index—based on consumers’ short-term outlook for income, business and labour market conditions—improved in July to 78.2. That’s up from 72.8 in June but still below 80—the threshold that usually signals a recession ahead.

“Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years,” said Dana M Peterson, chief economist at the US-based think tank.

“Even though consumers remain relatively positive about the labour market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future; things that may not improve until next year,” she said in a release.

“Compared to last month, consumers were somewhat less pessimistic about the future. Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead,” she said.

“The proportion of consumers predicting a forthcoming recession ticked up in July but remains well below the 2023 peak. Consumers’ assessments of their family’s financial situation—both currently and over the next six months—was less positive. Indeed, assessments of familial finances have deteriorated continuously since the beginning of 2024,” she noted.

Average 12-month inflation expectations remained stable at 5.4 per cent in July, compared to a peak of 7.9 per cent reported in 2022.

The share of consumers expecting higher interest rates over the next 12 months dropped for the second month in a row to 50.3 per cent—the lowest since February 2024.

Fibre2Fashion News Desk (DS)