Consumer Confidence Drops

Consumer Confidence Drops on Dim View of Job Market

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
August 31, 2004 11:35 a.m.

NEW YORK -- Amid growing concern about the health of the job market, consumer confidence dipped to its lowest mark since May, a closely watched private survey revealed.

The Conference Board said Tuesday its index of consumer confidence fell to a 98.2 reading in August from 105.7 in July, trailing the expectations of most economists by a wide berth. Forecasters surveyed by Dow Jones Newswires and CNBC had anticipated a reading of 104.

The slide in the number reflected a broad cooling of sentiment about both the present economic climate and the economy's prospects in the future. Consumers' assessment of present economic conditions fell to a reading of 100.7 from 106.4 in July, while expectations for the state of economic activity over the next six months dropped to 96.6 from 105.3. Those saying business conditions are "good" declined to 23.2% from 25.2%. Those claiming conditions are "bad" rose to 20.1% from 19.1%

"The slowdown in job growth has curbed consumers' confidence," said Lynn Franco, director of the Conference Board's consumer-research center. "Until the job market and pace of hiring picks up, this cautious attitude will prevail."

Anxiety about the outlook for hiring appeared to be building. An index of respondents who characterized jobs as "plentiful" fell to 18.1%, the lowest mark since May. Additionally, fewer consumers expect more jobs to be available in six months, the portion falling to 16.2% from 19.5% in July -- the lowest reading since March. Consumers expecting fewer jobs increased to 15.4% from 13.5%.

Job creation stumbled in June and July after impressive gains early in the spring. Nonfarm payrolls rose by just 32,000 in July, and the May and June numbers were both revised downward.

"A re-acceleration in hiring is needed to bolster consumer attitudes about the economy," wrote Steven Wood, of consulting firm Insight Economics, in a note to clients. "More jobs will also generate faster income growth that will support consumer spending. A lot is riding on companies hiring more workers."