Consumer confidence continues to recover in June 2020

The indicator that gauges consumers’ satisfaction with the current economic situation went up 1.3 points, to 73.2 points, after three monthly declines in a row, but it is still low in historical terms
Economics
25 June 2020
Consumer confidence continues to recover in June 2020

Fundação Getulio Vargas’ Consumer Confidence Index (ICC) rose 9.0 points in June, to 71.1 points. Confidence has now recovered for two consecutive months, but only 44% of the drop experienced in March and April has been offset.

“So far in June, consumer confidence has continued with the recovery that began in May. Pessimism about the near future has reduced further, and this time there has also been a slight decrease in dissatisfaction with the current situation. Expectations regarding the economy seem to be influenced by a hope that the lifting of social distancing measures will lead to an improvement in labor market conditions, thereby alleviating families’ financial problems. However, it is still too soon to envisage a consistent improvement in household consumption, as illustrated by the durable goods purchase impetus indicator, which continues to fluctuate close to its all-time low,” said Viviane Seda Bittencourt, FGV’s survey coordinator.

So far in June, perceptions of the current situation and expectations for the next few months have improved. The Current Situation Index (ISA) rose 5.6 points, to 70.6 points, ending a sequence of three consecutive months of decline. Meanwhile, the Expectations Index (IE) increased 11.1 points, to 72.8 points. It has now risen 17.8 points in the last two months, recovering 47% of its losses in March and April.

The indicator that gauges consumers’ satisfaction with the current economic situation went up 1.3 points, to 73.2 points, after three monthly declines in a row, but it is still low in historical terms. The indicator that measures families’ satisfaction with their current financial situation increased 9.7 points, to 68.5 points, after reaching its second ever lowest result in May.

Regarding prospects for the coming months, the indicator that measures expectations about the economic situation was the main factor behind the increase this month, growing 12.5 points, to 103.8 points, returning to an above-neutral level, although it is still lower than it was before the pandemic. Families’ expectations regarding their financial situation improved for the second month in a row, rising 9.0 points, to 80.6 points. Nevertheless, this has been enough to significantly boost impetus for purchases of durable goods. Although this indicator rose 10.2 points, the 37.6-point result is still one of the lowest ever recorded.

Looking at different income classes, confidence has recovered across all household categories, especially in the lowest income group, mainly influenced by improved expectations for household finances and better labor market conditions.

The complete study is available here.