Consumer confidence increased in October, snapping a three-month decline, as concerns about the delta variant subsided.
The headline Consumer Confidence Index rose to 113.8, up from 109.8 in September, as consumers expressed a more buoyant view of the economy, according to Conference Board data released on Tuesday.
The confidence could be seen in plans for major purchases. After a brief decline in August and September, the proportion of consumers planning to buy new homes, automobiles and major appliances all increased in October, pointing to a strong shopping season in the last quarter of the year.
The percentage of people who intended to take a vacation within the next six months was the highest since February 2020, rising to 47.6% as consumers gained more confidence to travel and spend on in-person services.
Also in the report, the Labor Differential Index—a leading indicator for monthly employment—rose to 45, the highest in two decades, from an upwardly revised 43.5 in September. This indicates a tight labor market as demand for labor remains strong and jobs are plentiful.
We expect that as the impact of the delta variant continues to fade, there is plenty of room for consumer confidence to improve in the last quarter of the year, which will most likely lead to more increases in spending as the holiday season approaches.