US consumer confidence dips to six-month low, labor market views soften
Reuters
U.S. consumer confidence slipped to a six-month low in May as Americans’ assessment of the labor market softened, but more households planned to purchase motor vehicles and other big-ticket items over the next six months, which could support economic growth this quarter.
The ebb in confidence reported by the Conference Board on Tuesday was concentrated among consumers aged 55 years and older, as well as among households with annual incomes in the $50,000-$99,000 range. Consumers expected inflation to stabilize at higher levels over the next year.
“Consumer confidence levels are in a holding pattern even if they are saying it isn’t quite as easy as it was to get a new job,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
“Older Americans were less confident in the future perhaps with talk of budget cuts and the eventual need to rein in entitlement programs like Social Security and Medicare.”
The Conference Board’s consumer confidence index slipped to 102.3 this month, the lowest level since last November, from an upwardly revised 103.7 in April. Economists polled by Reuters had expected the index to fall to 99 from the previously reported reading of 101.3.
The cutoff date for the survey, which places more emphasis on the labor market, was May 22. A fight to raise the government’s borrowing cap weighed on the University of Michigan’s consumer sentiment measure this month.
President Joe Biden and Republican U.S. House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a U.S. debt default.
Consumers were less optimistic on the labor market, with the share viewing jobs as “plentiful” falling to the lowest level since April 2021 and the proportion of those saying jobs were “hard to get” rising to a six-month high.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, fell to 31.0, the lowest since April 2021, from 36.9 in April, suggesting the labor market was loosening up.
This measure correlates to the unemployment rate from the U.S. Labor Department. The jobless rate fell back to a 53-year low of 3.4% in April. The government is scheduled to publish its closely watched employment report for May on Friday.
More timely data like first-time applications for state unemployment benefits suggests the labor market remains tight, but is gradually easing.
“Job growth is slowing,” said Jeffrey Roach, chief economist at LPL Financial in North Carolina. “Investors should expect Friday’s job report to reveal emerging cracks in the labor market.”
