Consumer confidence fell in May as views of employment conditions deteriorated, a key survey of U.S. households showed Tuesday.
The Conference Board said its index of consumer confidence fell to 102.3, the lowest level since last November. The measure has declined in four out of the last five months.
“Consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, senior director of economics at the Conference Board. “Their assessment of current employment conditions saw the most significant deterioration.”
Economists had expected a lower reading. The median forecast was for a reading of 100.0. The prior month, initially reported at 101.3, was revised up to 103.7. So although consumer confidence fell, it is higher than reported in April.
The Conference Board said that plans to purchase autos and big-ticket appliances ticked up somewhat compared to April. Plans to purchase homes remained steady.
The expectations side of the index slipped to 71.5 from 71.7. With the exception of December, the expectations index has been below the 80 threshold consistent with a recession within the next year for 15 months. In other words, the measure suggests the economy is overdue for a recession.
Consumers’ assessment of current business conditions improved slightly in May, with the share of consumers saying conditions are good moving up from 19.0 percent to 19.6 percent and the share saying they are bad moving down to 17 percent from 18.1 percent.
Views of the labor market deteriorated slightly but remain favorable. The share of consumers saying jobs are “plentiful” fell to 43.4 percent from 47.5 percent. The share saying jobs are “hard to get” moved up to 12.5 percent from 10.6 percent last month.
The outlook for the labor market six months from now worsened a bit. The share of consumers who expect fewer jobs ticked down to 20.2 percent from 21.3 percent. But the share expecting more jobs also declined to 13.6 percent from 14.3 percent.
Similarly, the share of consumers who expect business conditions to improve slipped to 12.9 percent from 14.1 percent while the share expecting conditions to worsen also declined slightly, falling to 20.6 percent from 21.4 percent.
Consumers were slightly more optimistic about their incomes, which might mean there could be more inflation pressures building in the economy. The share of consumers expecting their incomes to rise over the next six months moved up to 17.8 percent from 17.3 percent. The share expecting their incomes to fall was flat at 11.5 percent.
“Consumers also became more downbeat about future business conditions, weighing on the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady. While consumer confidence has fallen across all age and income categories over the past three months, May’s decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age,” Ozyildirim said.
The survey is based on responses through May 22, so it does not reflect reactions to the debt ceiling agreement reached over the past weekend.
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