March 15, 2019 Reading Time: 2 minutes

The preliminary March results from the University of Michigan Surveys of Consumer Sentiment show overall consumer sentiment improved from the final February result. Consumer sentiment increased to 97.8 in early March, up from 93.8 in February, a 4.3 percent gain. From a year ago, the index is off 3.6 percent. Despite the slight decline, sentiment is holding at very favorable levels (see chart).

The two sub-indexes had solid performances in early March. First, the current-economic-conditions index rose to 111.2 from 108.5 in February (see chart). That is a 2.5 percent gain for the first part of the month but an 8.3 percent decrease from March 2018.

The second sub-index — that of consumer expectations, one of the AIER leading indicators — increased 5.7 percent for the month, to 89.2 (see chart), and was 0.5 percent up from a year ago.

Consumer sentiment remained at broadly favorable levels in early March, supported by a robust labor market, income gains, and record-high net worth.

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the number of open positions in the economy was up slightly in January to 7.581 million, just below the record-high 7.626 million in November. Private job openings in the United States totaled 6.902 million in January versus 6.860 million in December. The industries with the largest number of openings were professional and business services (1.343 million), health care (1.273 million), accommodation and food services (991,000), and retail (986,000).

The job-openings rate, openings divided by the sum of jobs and openings, held at 5.1 percent for the private sector. That is just 0.1 percentage points below the all-time high of 5.2 percent reached in November and December 2018. The highest openings rates were in accommodation and food services (6.5 percent), health care (5.9 percent), and professional and business services (5.9 percent).

A further sign of labor-market strength may be seen in the number of quits, which likely reflects confidence in the labor market. Quits totaled 3.284 million for the private sector in January versus 3.205 million in December. The layoffs rate, another key indicator for the labor market, held at 1.3 percent for private employers, and is consistent with the historically low initial claims as a percentage of employment. Combined, the high number of openings, the high openings rate, and the low layoffs rate all suggest the labor market remains very tight.

Overall, the data relating to the labor market continue to show strength. Despite a disappointing jobs report for February, job openings, layoffs, and quits remain high, supporting a high level of consumer sentiment.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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