By Rex Nutting
RISMEDIA, June 28, 2007?(MarketWatch)?U.S. consumers are in a “subdued” mood about the economy and the job market, the Conference Board said Tuesday.
The consumer confidence index fell to a reading of 103.9 in June from 108.5 in May, marking the lowest for the research group’s closely watched gauge since August.
Economists polled by MarketWatch had expecting a pullback, but to a level of 105.
The present situation index fell to 127.9 from 136.1, the lowest since November. The expectations index fell to 87.9 from 90.1, matching March’s low.
“Looking ahead, consumers remain rather subdued about short-term economic prospects,” said Lynn Franco, director of the Conference Board’s consumer research center.
The number of Americans who say jobs are plentiful fell to 27% from 29.1%, while the number who said jobs are hard to get rose to 21.1% from 19.7%.
The weakening in the jobs-plentiful question “suggests that next Friday’s payroll gain for the month will be a comparatively soft one,” wrote Joshua Shapiro, chief economist for MFR Inc.
Fewer consumers thought the nation’s economy was doing well and more thought it was bad, the May data showed. Still, optimists outnumbered pessimists by 27% to 16%.
Consumer confidence surveys have only a loose correlation with real economic activity, Shapiro said.
Retail chain store sales were weaker than expected last week, according to two weekly surveys. The International Council of Shopping Centers said its weekly index fell 0.7% and is up just 1.7% in the past year. Redbook said sales in the first three weeks of June fell 1% compared with last month, while sales were up 1.7% year-on-year.
With gasoline prices falling for a fifth straight week, retailers were hopeful that discretionary spending at their stores would get a boost, the ICSC said.
“Consumer finances remain a major drag on confidence,” wrote Scott Hoyt, an economist for Moody’s Economy.com. While job growth is healthy, borrowing has slowed, interest rates are rising and personal savings are low.
Consumers were guarded about the near term: The proportion saying business conditions would improve rose to 16.1% from 15.3%, but the percentage who expect conditions to worsen also was on the rise, reaching 11% from 10.2%.
Inflation expectations held steady, with consumers expecting a 5.4% increase in consumer prices in the next 12 months.
In another economic report Tuesday, new-home sales fell 1.6% to a seasonally adjusted annual rate of 915,000, the Commerce Department estimated.
Separately, home prices fell at the fastest pace in 16 years during the 12 months ending in April, Standard & Poor’s reported in the Case-Shiller price index.
Rex Nutting is Washington bureau chief of MarketWatch.
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