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Consumer confidence index (CCI) is the figure showing respond of consumers to current economic situation as well as their expectations or doubts in the future. Consumer confidence index is used to monitor general conditions of the economy and forecast employment tendencies. It is calculated since 1967.
Monthly the New York-based Conference Board – non-profit research organization under the US Department of Trade and Commerce – surveys 5000 American families to find confidence level of citizens.
The index is calculated in percentage as the relative value of number of positive and negative answers ("better – worse, neutrally") from the total number of polled people. All obtained results are averaged and compared with previous.
The list of questions (opinions):
Current business conditions
Business conditions for the next six months
Current employment conditions
Employment conditions for the next six months
Total family income for the next six months
Initial value is equated to 100% and divided by structure into two 2 subindices:
Present conditions – amount to 40% of the index
Expectations - amount to 60% of the index
The report is published at 10-00 a.m EST (Washington) or 6.00 p.m (MSK). Date of publication: monthly after 20th ,usually on the last Tuesday of the month.
Consumer confidence index per se slightly impacts the market because it is based on unofficial information. Also Consumer confidence index is related to anticipating indicators of trade cycle, that is to say, it does not show real status, but just forecasts economic situation. But despite the above-mentioned, many traders and investors still trace its figures because are concerned about possible pessimism of consumers' sentiment.
Change of the index for less than 5% are considered inessential. If the index changed for more than 5% in comparison to the previous value, more often it tells about significant changes in economy. Decline of the index from month to month suggests negative forecast for consumers regarding saving their working or business status; banks can predict about decline of credit activity, wherease investors can suspend new projects. In this case the government can undertake a number of measures to boost economy. If over the months the index will show growth of consumer confidence, employers can enhance hiring, whereas the government can improve tax revenue due to increase of consumer expenses.
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