Consumer confidence increased significantly in March, as motorists' car-buying plans reached the highest level in a year, the Conference Board said today in its monthly survey of households.
Results from the poll of 5,000 households don't reveal whether the improvement in consumer attitudes was a short-term reaction to President Reagan's economic program or a deeper indication of greater strength for the economy.
The Conference Board's consumer confidence index, reflecting responses to the poll, jumped more than 10 points to 71.3 in March, from 61.1 in February, exceeding the 71.2 figure of a year ago (the index in 1969-70 equals 100).
"It is still too early to make too much of this improvement in consumer spirits," said Fabian Linden, director of consumer economics at The Conference Board, "but this latest turn of events is encouraging."
The board said that while consumers remain unimpressed with current business conditions, they are somewhat more optimistic about the future. More than 21 percent expect business conditions to improve during the next six months, compared to less than 18 percent who felt that way in the February survey.
Buying plans reflected more optimism, as well, as 7.9 percent of the families said they plan to buy a new or used car during the next six months, up from the 7.3 percent figure in February, and the highest level in a year. The number of consumers planning to purchase homes was 2.9 percent in February, while purchase plans of major appliances also increased.
Separately, a national poll of purchasing managers also indicated a greater optimism toward the future, as nearly one third of those surveyed said they expect production and new orders to be better next month.
The survey of 225 companies by the National Association of Purchasing Management Inc. showed that 49 percent of the purchasing agents were either "satisfied" or "optimistic" about the economic outlook over the next 12 months. Another 44 percent said they were "concerned," while the remaining 7 percent were "worried" or "pessimistic." Last November, 53 percent responded positively, but that was probably a burst of euphoria from the presidential election outcome, the association said. A year ago, 32 percent of the purchasing agents felt satisfied or optimistic about the future.
The continuing reduction in inventories reported in the survey is probably boosting expectations of future gains in production, since the lower inventories will have to be replaced when economic activity picks up. The March survey showed that 32 percent of the purchasing agents believed production will increase, compared to 53 percent who predicted no change and 15 percent who thought it would be worse. In February, 21 percent expected increasing production, 62 percent saw no change, and 17 percent expected a decline.
The williness of agents to make long-term capital investments also increased, from 69 percent of the survey in February, to 70 percent in March, another measure of slowly growing confidence.