LITTLE ROCK — Confidence among U.S. consumers unexpectedly fell in May to the lowest level in four months as Americans grew more pessimistic about the labor market.
The Conference Board’s confidence index decreased to 64.9 from a revised 68.7 in the prior month, the New York-based private research group reported Tuesday. The median forecast of economists surveyed by Bloomberg News called for a reading of 69.6.
“Consumers were less positive about current business and labor-market conditions, and they were more pessimistic about the short-term outlook,” said Lynn Franco, director of economic indicators at the Conference Board. “However, consumers were more upbeat about their income prospects, which should help sustain spending.”
The weakest payroll gains in six months may raise concerns that economic growth is not fast enough to bring down the jobless rate. More employment is needed to increase consumer spending, which accounts for about 70 percent of the economy.
“We are making progress when it comes to the labor market, but clearly this is another sign that it’s still very slow-going,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pa., whose forecast was closest. “When we see expectations get marked down, that can cause consumers to think twice about making big-ticket purchases.”
Stocks maintained gains after the figure was released, with the Dow Jones industrial the day at 12,580.69.
Estimates for consumer confidence ranged from 62 to 74.1 in the Bloomberg survey of 70 economists. The measure averaged 53.7 during the 18-month recession that ended in June 2009.
The decline in the Conference Board’s measure is at odds with the Thomson Reuters/ University of Michigan’s measure of consumer confidence, which climbed this month to the highest level since October 2007.
The two indexes are the most closely followed for consumer attitudes.
They both calculate confidence by taking a random sample of consumer attitudes.
The Conference Board’s measure of present conditions decreased to 45.9, the weakest since January, from 51.2 a month earlier. The gauge of expectations for the next six months fell to 77.6 from 80.4.
The share of consumers who said jobs are currently plentiful decreased to 7.9 percent from 8.4 percent. Those who said jobs are hard to get climbed to 41 percent from 38.1 percent.
The percent of respondents expecting more jobs to become available in the next six months decreased to 15.8, the lowest this year, from 16.9 the previous month. The proportion who expect their incomes to rise over the next six months advanced to 15.2 percent from 13.9 percent. Even with the gain, income expectations are down from the end of 2011.
Buying plans held up in May. The share of households planning to buy autos and appliances increased.
Employers have increased payrolls by 1.18 million workers over the past six months, and the unemployment rate dropped to 8.1 percent in April, compared with 8.9 percent in October. Still, employment growth has slowed in the past three months.
Mark Vitner, an economist at Wells Fargo, said the Conference Board’s May reading is disappointing but is consistent with the sluggish economic recovery so far.
“In some ways, it’s a microcosm of the whole economic recovery,” he said. “Every once in a while hopes are raised that things are getting better, and then the bottom seems to fall out again.”
Information for this article was contributed by Chris Middleton and Timothy R. Homan of Bloomberg News, Jim Puzzanghera of the Los Angeles Times and by The Associated Press.
Business, Pages 25 on 05/30/2012