Posted on 29 Jun 2010
U.S. consumer confidence dropped sharply in June, as concerns over the sustainability of economic recovery and the outlook for jobs brought one closely watched indicator's three-month streak of consecutive gains to an end.
The Conference Board, a private research group, said its index of consumer confidence for June dropped to 52.9 compared with the 62.7 seen in May, a figure that was revised down from a previously reported 63.3. The current month's reading was far below economists' expectations for 62.5, according to a survey conducted by Dow Jones Newswires.
The present situation index, a gauge of consumers' assessment of current economic conditions, fell to 25.5 from a 29.8 the prior month. May's result was previously reported as 30.2.
Meanwhile, consumer expectations for the state of economic activity over the next six months plunged to 71.2 from 84.6 in May, previously reported as 85.3.
The drop in the expectations index more than halved the steep 22.4 point-gain it had seen in the three months since February, an increase that had put it to its highest level since an 89.2 reading in August 2007, just before the last recession began.
"Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence," said Lynn Franco, director of the Conference Board Consumer Research Center. "Until the pace of job growth picks up, consumer confidence is not likely to pick up."
The June survey was conducted after the release at the beginning of the month of May payrolls data from the Bureau of Labor Statistics that showed a far-lower-than-expected rate of jobs growth in the private sector.
This was reflected in an increase in the percentage of respondents who think jobs are "hard to get" to 44.8% from an upwardly revised 43.9% in May. Meanwhile, those who think jobs are "plentiful" continued to fall, dropping to 4.3% from 4.6% in May.
Expectations about labor markets in the future also deteriorated. The percentage of consumers expecting more jobs in the months ahead dropped from 20.2% in May to 16.0% in June, below even its April reading of 17.7%. The proportion expecting fewer jobs rose to 11.4% from 10.6% last month.