Consumer confidence slips in May
But May survey shows protracted pain at the pump and concerns about the labor market didn't hurt confidence as much as expected.
May 30, 2006: 10:36 AM EDT
NEW YORK (CNNMoney.com) - U.S. consumer confidence fell in May with higher gasoline prices and concerns about the labor market being the main culprits behind the drop, a report showed Tuesday.
However, May's reading was above economists' expectations.
The Conference Board said its index of consumer sentiment slipped to 103.2, from an upwardly revised reading of 109.8 in April.
Economists polled by Briefing.com on average had forecast that the index would likely fall to 100.9.
"Consumer confidence, which reached a four-year high in April, lost ground in May," Lynn Franco, director of the Conference Board Consumer Research Center, said in the report. "Apprehension about the short-term outlook for the economy, the labor market and consumers' earning potential has driven the Index down to levels not seen since the aftermath of the hurricanes last summer."
At the same time, consumers continue to rate current conditions favorably, although the Present Situation Index eased somewhat in May.
The business research group's present situation index slipped to 132.5 from 136.2 in April, while the expectations component also fell 83.7 from an upwardly revised 92.3 last month.
Consumers indicated some concern about their job prospects. Those saying jobs are "plentiful" decreased to 28.6 percent from 29.4 percent in April, while those claiming jobs are "hard to get" increased to 20.5 percent from 19.7 percent, the report said.
Looking ahead, Franco said the Index bears close watching, "as it is often a harbinger of times to come." According to the report, those consumers expecting business conditions to worsen increased to 13.2 percent from 9.3 percent in April.
The outlook for the labor market was also less optimistic. Those expecting more jobs to become available in the coming months decreased to 14.6 percent from 15.4 percent in April while the proportion of consumers anticipating their incomes to increase in the months ahead declined to 16.6 percent from 18.0 percent in April.
Sentiment indexes have traditionally been seen as a gauge of U.S. consumer spending, which accounts for roughly two-thirds of overall economic activity.