The much-watched Consumer Confidence Index hit a five month low in July, dampening investor enthusiasm after three days of big gains in the Dow and most other markets.
The Dow closed in positive territory, but just barely. Both the NASDAQ and the S&P 500 lost ground for the day.
The Conference Board’s Index fell to 50.4 from a revised 54.3 in June. The Index was last this low in February, when it stood at 46.4. Despite encouraging quarterly financial reports that have been trickling in since the end of June, the percent of consumers who expect business conditions to worsen rose in July to 15.7 from 13.9 percent in June.
Even more consumers are pessimistic about job growth over the next several months.
One in five (21.1 percent) expect fewer jobs to be available in the near future. The percent of optimists about future growth — those expecting more jobs — fell to 14.3 percent from 16.2.
“Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves,” says Lynn Franco, director of The Conference Board Consumer Research Center. She warned that this year’s back-to-school retail season may be “challenging” due to “consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth.”
Consistent with the decline in The Conference Board’s Index, the Thomson Reuters/University of Michigan confidence index dropped almost 10 points, going from 76 in June to 66.5 in July. That’s the lowest in a year.
Bloomberg News quoted Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, declaring “Faith in the economic recovery is failing. It’ll be 2013 before we see any semblance of normality in the labor market,” he predicted.
Economists, job seekers, and recruiters will be watching closely next week as the U.S. Bureau of Labor Statistics reports the critical employment situation numbers. July’s numbers are expected to offer a sharper picture of job creation, because the counts should finally be cleared of most of the influence of the hiring and termination of hundreds of thousands of temporary Census workers.
Especially watched, as it has been since the Census ramp-up began, will be the private sector employment. The ADP National Employment Report, to be released Wednesday, will offer some clues about the BLS report, which will be out Friday morning.
The Index is a composite of the results of responses to an economic survey conducted monthly by TNS for The Conference Board, a private business economics research group.