The US Conference Board Consumer Confidence Index declined sharply in Jun-2010, from 62.7 in May-2010. It had previously been rising for three consecutive months. According to the Board, “Consumer Confidence…retreated sharply in June. Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence.”
Air travel sentiment remains strong
Interestingly though, according to The Conference Board's monthly survey, those planning to travel by air for vacation held up well – easing from 17.8% in Apr-2010 to 17.2% in Jun-2010. This is still however well up from the 16.0% in Feb-2010 and the 14.6% in Dec-2009 who planned to take a vacation by air.
7.2% of those surveyed plan to take an international vacation trip, compared with 7.8% in Apr-2010 and 7.1% in Dec-2009. However, this positive sign is not so evident for domestic travel, where the percentage has slipped to 29.6%, from 32.0% in Apr-2010 and 30.6% in Dec-2009.
This strength in discretionary travel confidence may reflect a widening gap between the 'haves and the have-nots'. Those in full time employment are still able to enjoy some good bargains, while the job market stagnates and offers little comfort for the unemployed.
However, business conditions received a less favourable view. 42.4% of respondents felt business conditions were “bad”, up from 39.5% in May-2010.
Meanwhile, jobs in the airline industry are certainly harder to come by; earlier this month, the US BTS reported that employment in US air passenger airlines declined 4.1% in Apr-2010, year-on-year; this follows a 5.5% reduction in Apr-2009. This does however in most cases broadly reflect the direction of major airline capacity over the same period.
IATA says air freight – indicator of business activity - is surging
Not all the signs are consistent. Air freight, which is generally a good indicator of forward business activity, however continued to surge in May-2010.
Reporting yesterday, IATA announced that North American air freight was up a very healthy 35.3% year-on-year in May-2010. Global air freight volumes were up 34.3% year-on-year for the month and well above the levels of 2008. According to IATA, “Both air travel and air freight market are now higher than pre-recession levels and appear to have considerable momentum, outside of European travel markets.”
The growth was strongest in the Asia Pacific region (accounting for 45% of global traffic), with an increase of 38.7% year-on-year.
Stocks down across the board on 29-Jun-2010
But a chill wind of sentiment sweeping the US pushed the stock market down, taking with it all airline stocks in the Americas. The Dow Jones Industrial Index fell 2.7%, slipping below 10,000, to 9,870.
North & South America selected airlines daily share price movements (% change): 29-Jun-2010