RISMEDIA, July 20, 2010—(MCT)—U.S. consumer sentiment plummeted in early July 2010, hitting the lowest level since August, according to survey results released by Reuters and the University of Michigan.
The UM index fell to 66.5 in early July from 76 in late June, a drop attributed to consumers’ worries about weak hiring and a slowly healing economy. The June reading was the highest level in more than two years. The average level of the index is around 87.
The reading has only dropped this much or more seven times. The data goes back to 1978. The drop of 9.5 points in early July compares with a drop of 9.7 points following the terrorist attacks of Sept. 11, 2001.
Economists surveyed by MarketWatch had expected a July reading of 74.3. The university will produce a final July sentiment reading later this month. Respondents are pessimistic about their future financial prospects, and the UM results are “discouraging,” wrote analysts at Barclays Capital Research in a research note.
“Although some of the decline in today’s release could be attributed to monthly volatility, the overall report was discouraging, as consumers reported being increasingly pessimistic about their current economic situations, as well as their expectations of future income growth,” according to Barclays. “That said, such moves in sentiment cannot always be translated into spending habits, and we await July’s hard data, particularly for retail sales, to assess the outlook for the third quarter.”
Readings on consumer expectations and current conditions also fell in early July from June. The expectations reading fell to 60.6, the lowest level since March 2009, from 69.8. Meanwhile, the current conditions reading declined to 75.5, the lowest reading since November, from 85.6.
A separate reading on confidence, from the Conference Board, also recently dropped sharply, with consumers increasingly worried about jobs and the economy.
Earlier in July, the government reported that total nonfarm payroll employment fell by 125,000 in June, with the number of temporary Census workers dropping by 225,000, and weak private sector hiring.
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