Rising consumer confidence could lead to heightened purchase order financing demand

Consumers continued to gain confidence in the economy during June, which is a positive sign for future economic growth. 

As the U.S. economy improves, numerous industries could begin to see additional business, including manufacturing. Oftentimes, this can lead to manufacturers receiving larger orders, and small companies might need to rely on purchase order financing to fill them. 

The Conference Board Consumer Confidence Index increased in June to 81.4, up from 74.3 in May. Meanwhile, consumers were feeling better about their present and future prospects, with gains to both the Present Situation and Expectations Indexes. 

This bump in confidence was greater than the expectations of economists surveyed by Bloomberg, who projected a reading of 75.1. 

"Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year," said Lynn Franco, director of economic indicators at The Conference Board. "Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up."

Numerous factors have been playing into surging consumer confidence, including rising residential property values and stock prices, as well as gains in employment, Bloomberg noted

Should the economy begin to see heightened growth levels, manufacturers could start to receive larger orders from big-box retailers, such as Target or Walmart. Small-to medium-sized businesses often struggle to fill these orders on their own due to limited available capital, which is why they need to turn to financing. 

One type of lending agreement that can be beneficial is purchase order financing, which allows a business to receive up to 100 percent of the funds needed to fill an order. This allows a company to avoid having to sell equity in order to take on new business.