Consumer Confidence in U.S. Dropped to 49.3 in June From 54.8Confidence among U.S. consumers slipped unexpectedly in June, reflecting a weak labor market.
The Conference Board’s sentiment index decreased to 49.3 from a revised 54.8 in May, the New York-based research group said today. The figure was still above a record low of 25.3 reached in February. Another report showed home prices fell at a slower pace in April than in the previous month.
Recent jumps in the stock market, smaller job losses and government efforts to restore the flow of credit and prop up incomes are brightening some consumers’ outlooks and allowing them to spend even as unemployment rises. Still, firms have been slow to start hiring again and the wealth destruction caused by the housing slump is forcing Americans to rebuild savings.
“The optimism that started to build over the last few months may be starting to fade,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. “Labor markets are sort of stabilizing in terms of job losses, but the big issue is people are having a hard time finding a job.”
Economists forecast confidence would rise to 55.3 from 54.9 in the prior month, according to the median of 70 forecasts in a Bloomberg News survey. Estimates ranged from 51.5 to 60.
A report from S&P/Case-Shiller earlier today showed home prices in 20 U.S. metropolitan areas fell a less-than-forecast 18.1 percent in April from the same month last year.
The Conference Board’s measure of present conditions decreased to 24.8 from 29.7 the prior month. The gauge of expectations for the next six months fell to 65.5 from 71.5.
The share of consumers who said more jobs will be available in the next six months fell to 17.4 percent from 19.3 percent. The proportion of people who said they expect their incomes to rise over the next six months decreased to 9.8 percent from 10.8 percent.
The share of consumers who said jobs were plentiful now fell to 4.5 percent from 5.8 percent. Those saying jobs were hard to get increased to 44.8 percent from 43.9 percent.
Today’s confidence figures run counter to other reports. The Reuters/University of Michigan final index of consumer sentiment for June rose to 70.8, the highest level in more than a year.
Economists say the Conference Board’s index tends to be more influenced by attitudes about the labor market.
The Labor Department is scheduled to release its June payrolls report on July 2. The U.S. probably lost 363,000 jobs in June, compared with a 345,000 drop a month earlier, according to economists surveyed by Bloomberg. The unemployment rate, already at the highest level in more than 25 years, likely increased to 9.6 percent, the survey said.
Consumer spending rose in May as benefits from the Obama administration’s stimulus plan spurred a jump in American incomes, a sign that efforts to revive the economy are starting to pay off. The 0.3 percent increase in purchases was the first gain in three months, the Commerce Department said June 26 in Washington. Earnings climbed 1.4 percent, the most in a year, driving the savings rate to a 15-year high.
On a quarterly basis, consumer spending rose in the first three months of the year at a 1.4 percent rate after falling in the last half of 2008 by the most since 1980, according to revised figures from Commerce on June 25.
Recent data shows the housing market stabilizing at a low level. Sales of existing homes rose for a second straight month in May, marking the first back-to-back gain since 2005, according to the National Association of Realtors.
The Mortgage Bankers Association’s index of applications to purchase homes has risen in six of the past eight weeks.
Some retailers continue to offer incentives in a bid to maintain customers. Sears Holdings Corp., the largest U.S. department-store chain, said yesterday it will let customers who lose their jobs suspend payments and keep appliances bought with store credit cards.
Customers who spend at least $399 on appliances and related merchandise between July 6 and Aug. 1 will have one-twelfth of the purchase price credited to their account for every month they’re out of work, said Larry Costello, a company spokesman. Those who are jobless for more than a year will have the full debt forgiven, he said.
“We thought this would be a way to get folks to jump in where they’d been a little reluctant,” Doug Moore, president of Sears’s home-appliance unit, said in a telephone interview.
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