The most recent Nielsen Global Consumer Confidence Index released yesterday showed consumers around the world are expressing more confidence about their personal financial situations, while the U.S. recorded its first increase in consumer confidence since early 2007.  However, a report from The Conference Board Consumer Confidence Index® says the index, which had declined in September, deteriorated further in October for US.

With many economists reporting that the worst of the global economic crisis appears to be past, consumers around the world are expressing more confidence about their personal financial situations according to the most recent Nielsen Global Consumer Confidence Index, which jumped 9 points from 77 index points in April to 86 in October.

Brazil, Hong Kong and South Korea recorded double-digit boosts in confidence, while the U.S. recorded its first increase in consumer confidence since early 2007. But even though most consumers are feeling better about the economy, they remain cautious about spending their money.

“A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery — the tide has turned,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “In this economic climate, sentiment is closely correlated to actual sales. For example, in Australia, consumer confidence was up 11 points in the third quarter, and strong economic conditions prompted the Reserve Bank of Australia to raise rates, becoming the first G20 country to do so. Correspondingly, we have seen sales increase 2 percent in each of the last two months in defined fast moving consumer goods (FMCG) categories while online sentiment (buzz) regarding the recession is at the lowest levels since we began tracking that dynamic in January 2009.”

Conflicting reports

However, The Conference Board Consumer Confidence Index®, which had declined in September, deteriorated further in October for US. The Index now stands at 47.7 (1985=100), down from 53.4 in September. The Present Situation Index decreased to 20.7 from 23.0 last month. The Expectations Index declined to 65.7 from 73.7 in September.

"Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment. In fact, the Present Situation Index is now at its lowest reading in 26 years (Index 17.5, Feb. 1983). The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays", Says Lynn Franco, Director of The Conference Board Consumer Research Center.

The Consumer Confidence Survey® is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS.  TNS is the world's largest custom research company. The cutoff date for October's preliminary results was October 21st.

Consumers' assessment of current conditions worsened in October. Those claiming business conditions are "bad" increased to 47.1 percent from 46.3 percent, while those claiming conditions are "good" decreased to 7.7 percent from 8.6 percent. Consumers' appraisal of the labor market was also bleaker. Those claiming jobs are "hard to get" increased to 49.6 percent from 47.0 percent, while those claiming jobs are "plentiful" decreased to 3.4 percent from 3.6 percent.

Consumers' short-term outlook grew more pessimistic in October. Those anticipating an improvement in business conditions over the next six months decreased to 20.8 percent from 21.3 percent, while those expecting conditions to worsen increased to 18.3 percent from 14.6 percent.

The labor market outlook was also more negative. The percentage of consumers expecting more jobs in the months ahead declined to 16.3 percent from 18.0 percent, while those expecting fewer jobs increased to 26.6 percent from 22.9 percent. The proportion of consumers expecting an increase in their incomes decreased to 10.3 percent from 11.2 percent.

In Europe

But the Nielsen Global Consumer Confidence Index and The Conference Board Leading Economic Index™ (LEI) for the Euro Area agreed.  The Conference Board says that increased 1.2 percent in September to 100.6 (2004 = 100), following a 1.8 percent increase in August and a 1.7 percent increase in July. Seven of the eight components contributed positively to the index this month.

Said Jean-Claude Manini, The Conference Board Senior Economist for Europe: "Strong gains over the last six months in the LEIs for the Euro Area, Germany and France point to a continuing recovery process. However, current economic conditions remain weak and the continued downtrend in Euro Area employment combined with expiring stimulus measures pose a risk of an extended weak growth period following the near term recovery."

The Conference Board LEI for the Euro Area has increased by 9.6 percent during 2009 after falling more than 15.0 percent between June 2007 and December 2008. Meanwhile, The Conference Board Coincident Economic Index™ (CEI) for the Euro Area, a measure of current economic activity, declined by 0.1 percent in September, falling to 101.7 (2004 = 100), according to preliminary estimates*, after decreasing by 0.1 percent in August and remaining unchanged in July. The rate of decline for The Conference Board CEI for the Euro Area has slowed substantially during the past six months.

The Conference Board LEI for the Euro Area aggregates eight economic indicators that measure activity in the Euro Area as a whole (rather than indicators of individual member countries), each of which has proven accurate on its own. Aggregating individual indicators into a composite index filters out so-called "noise" to show underlying trends more clearly.