US consumer confidence declined unexpectedly in April, as concerns about the labour market and the short-term outlook weighed on sentiment.
The Conference Board’s consumer confidence index plunged to 95.2 in April from 101.4 in March. Economists forecast an increase to 102.5. The index is now well below January’s more than seven-year high of 103.8.
The consumer confidence index is used as a proxy for personal spending and consumption, which accounts for the bulk of economic activity in the United States.
The present situation index declined to 106.8 in April from 109.6 in March, while the barometer of expectations fell to 87.5 from 96.0.
“Consumer confidence, which had rebounded in March, gave back all of the gain and more in April,” said Lynn Franco, director at The Conference Board.
She added, “This month’s retreat was prompted by a softening in current conditions, likely sparked by the recent lackluster performance of the labor market, and apprehension about the short-term outlook.”
Consumers’ appraisal of the current situation continued to soften. The proportion of respondents saying business conditions are “good” decreased to 26.5 percent from 26.7 percent. However, those claiming conditions are “bad” also fell to 18.2 percent from 19.4 percent.
Optimism about the short-term outlook retreated in April, as the percentage of respondents expecting business conditions to improve in the next six months fell to 16 percent from 16.8 percent.
The outlook on the labour market was less optimistic this month. In total, 13.8 percent of consumers said they are expecting to see more jobs in the months ahead, down from 15.8 percent who said the same in March. Those anticipating fewer jobs increased to 16.3 percent from 13.6 percent. The percentage of consumers expecting incomes to rise edged down to 18.3 percent from 18.8 percent, the Conference Board said.
Optimism about the labour market will likely improve next month, as job creation rebounds from March’s unexpected slowdown. Employers added 126,000 nonfarm payrolls in March, the slowest rate of hiring since December 2013. Severe weather was mostly to blame. Economists believe the economy added more than 200,000 jobs in April, consistent with the trend observed in the 13 months to March.
On Monday Markit Group said the US service economy weakened somewhat in April, but that job growth was the strongest since June 2014. The services sector usually accounts for more than 80 percent of total employment growth.