Survey says consumer confidence plunges in August to its lowest level in 9 months
Tuesday, August 29th 2006, 9:54 am
By: News On 6
NEW YORK (AP) _ Worries about the job market caused consumers' confidence in the U.S. economy to tumble more than expected in August to its lowest level in nine months.
The Conference Board, a New York-based research group, said Tuesday its confidence index fell to a reading of 99.6, down from 107.0 in July. The index was lower than analysts' expectation of 102.5.
The last time the index fell below 100 was in November, which saw a reading of 98.3.
Lynn Franco, director of the Conference Board's consumer research center, said this month's drop _ the largest one-month decline since Hurricane Katrina ravaged the Gulf Coast a year ago _ means expectations of slower growth in the coming months.
``You've got a deterioration in business conditions coupled with lackluster job growth,'' Franco said.
Americans' sentiment about the labor market worsened in August, with consumers saying jobs are ``plentiful'' decreasing to 24.4 percent in August from 28.6 percent in July, and those saying jobs are ``hard to get'' increasing to 21.1 percent from 19.6 percent.
Consumer confidence has been volatile this year, with rising interest rates, high energy prices and fighting in the Middle East weighing on Americans' view of how the U.S. economy is doing.
Even with the recent retreat in gasoline prices, inflation worries remain high. ``Consumers are feeling their dollars are getting stretched a little thin,'' Franco said.
The Conference Board's present situation index, which measures how respondents feel about current economic conditions, plummeted to 123.4 in August from 134.2 in July.
The expectations index, which gauges consumers' outlook over the next six months, dropped to 83.8 in August from 88.9 a month earlier.
Consumers saying overall conditions are ``good'' fell to 26.1 percent in August from 27.3 percent in July. Those saying conditions are ``bad'' rose to 16.7 percent from 15.0 percent.
The report _ derived from responses through Aug. 22 to a survey mailed to 5,000 households in a consumer research panel _ showed that consumers' view of labor market prospects weakened. Those expecting more jobs to open up in the next few months fell to 14.0 percent in August from 14.3 in July, and those expecting fewer jobs rose to 18.3 percent from 16.5 percent.
Stocks fell in Tuesday morning trading. The Dow Jones industrial average fell 31.78, or 0.28 percent, to 11,320.23, and the Nasdaq fell 10.06, or 0.47 percent, to 2,150.64.
Oil prices traded below $70 a barrel Tuesday in New York, as an Atlantic storm veered away from the Gulf coast oil refining region.