Economy

Consumer Confidence Drops Again in May

Jon C. Ogg

Consumer confidence managed to drop in May. The Conference Board survey showed that consumer confidence fell to 92.6 for the month. Bloomberg had a consensus estimate of 97.0 and Dow Jones was calling for a reading of 96.0.

April’s’ preliminary reading of 94.2 was revised upward to 94.7. While it is good that the number was revised higher, it makes this drop look exacerbated, versus expectations for growth. This also represents the second straight month of decline.

Declines were seen in the current and expectations components alike. The Conference Board said that the Present Situation Index fell from 117.1 in April to 112.9 in May. The Expectations Index declined from 79.7 in April to 79.0. The cutoff date for the preliminary results was May 19.

Consumers’ assessment of current conditions weakened in May. The percentage of those surveyed stating that business conditions are “good” rose from 24.2% to 25.9%. Simultaneously, those surveyed who said that business conditions are “bad” also increased, rising from 18.2% in April up to 21.6% in May.

Consumers’ appraisal of the labor market was also deemed to be less favorable in May than in April. That coincides with weaker jobs data from other recent reports. Those surveyed who claimed that jobs are “plentiful” was virtually unchanged at 24.3%. Those surveyed who claimed that jobs are “hard to get” rose from 22.8% in April to 24.4% in May.

Consumers were less optimistic about the short-term outlook than last month:

  • Those expecting business conditions to improve over the next six months increased from 13.8% in April to 15.1% in May.
  • Those expecting business conditions to worsen also rose, rising from 10.8% in April up to 11.6% in May.

Consumers’ outlook for the labor market was less favorable:

  • Those anticipating more jobs in the months ahead was virtually unchanged at 12.8%.
  • Those anticipating fewer jobs increased from 16.7% to 18.1%.
  • The proportion of consumers expecting their incomes to increase improved from 15.8% to 16.2%.
  • The proportion expecting a reduction in income remained steady at 12.4%.

Lynn Franco, Director of Economic Indicators at The Conference Board, said:

Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April. Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.