Consumer sentiment has improved but is still weak
SPY•The LSEG/Ipsos consumer sentiment index improved from its prior reading, which had fallen to a 15-year low, but remained about two points below its level a year earlier. Analysts expect retailer earnings growth to slow to 8.0% in Q3 from 71.7% in Q2, while revenue is projected to rise 6.2%.
1. Sentiment improves
The LSEG/Ipsos Primary Consumer Sentiment Index improved from its prior reading’s sharp decline to a 15-year low. The October 23-29 survey found the index remained about two points below its level at the same time last year. Ipsos senior research manager Johnny Sawyer said inflation, largely driven by higher energy costs, persisted and that cost-of-living frustrations likely played a large role in the midterm elections.
2. Retail outlook cools
LSEG director of consumer research Jharonne Martis said retailers’ Q3 earnings outlook was more cautious. Analysts expect earnings growth to moderate to 8.0% from 71.7% in Q2, while revenue is projected to rise 6.2%. Martis said mounting merchandise, labor and operating costs, alongside increasingly price-sensitive consumers, could make it more difficult for retailers to protect profit margins.
