Confidence Among U.S. Consumers Falls to Six-Month Low
Consumer confidence in the United States declined more than expected in May to its lowest level in six months as Americans adjusted their outlook on the labor market and housing conditions to the downside. The Conference Board’s index release today showed a reading of 60.8 versus a revised 66.0 reading in April, falling short of expectations of 66.6, according to a Bloomberg News survey. Despite what appears to be an improving employment situation, with the unemployment rate forecasted to drop below 9.0 percent again as per a release on Friday, a frail housing market coupled with weakening manufacturing appears to be weighing on the sentiment of consumers. Additionally, continued elevated tensions in the Middle East and North Africa, which have supported a higher oil price, are unlikely to be influencing the morale of American consumers either.
U.S. Conference Board Consumer Confidence: May 2008 to Present
The index fell to a six-month low of 60.8 in May, from a 66.0 reading in April, its lowest reading since December. The last time the confidence index was below 60.0 was in November, when it high 57.8. Today’s release showed that the index was eroded by the confidence in the economy going forward. Consumers are particularly bearish on the direction of the economy, with the May 6-month outlook declining to 75.2 from 83.2 in April. Similarly, the current conditions gauge for May dropped to 39.3 from 40.2. If the labor market continues to improve, perhaps there could be a rebound, but given the uncertainty in the market, as well as the concern over whether or not the Federal Reserve will continue to inject the market with liquidity, confidence could continue to fall.
In the wake of the news, the Dollar Index slipped continued its decline that began with the Bank of Canada Rate Decision, falling from 9566.34 before the confidence reading to as low as 9555.55 at the time this report was written.
Written by Christopher Vecchio, Currency Analyst
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