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Consumer comfort in US drops most in five months on finances
[WASHINGTON] Consumer confidence fell last week by the most in five months as households' attitudes about their finances and US economy deteriorated.
The Bloomberg Consumer Comfort Index declined to 40.5 in the week ended July 26, matching the second-lowest level since November, from 42.4. The measure of attitudes about personal finances suffered its biggest weekly setback in 10 months.
Sentiment has soured recently as concerns about Greek debt and China's economic slowdown ignited stock-market volatility in the US Continued improvement in the labor market that pushes wages higher would help reassure Americans the recovery remains on track, giving them the confidence and the means to boost spending.
The personal finances gauge fell to 54.9 from 57.8 in the previous week, the biggest drop since September, while the measure of Americans' views on the state of the economy fell to an eight-month low of 30.4 from 32.2.
An index tracking the buying climate, which indicates whether consumers think now is a good time to purchase goods and services, dropped by 1 point to 36.2.
Sentiment fell in six of seven income brackets, with confidence among those earning US$15,000 to US$25,000 posting the biggest decline. Americans making US$40,000 to US$50,000 were the only group whose comfort levels improved.
Those with incomes exceeding US$100,000 a year dropped to a more than 10-month low, probably a reflection of last week's slump in stock prices on concerns about China's economy.
Confidence among the oldest households last week reached the lowest level since October, while full-time employees' sentiment fell to a two-month low.
Regionally, confidence in the Northeast declined by the most since May 2014. The West was the only area to show an increase.
With the boost to consumer sentiment from falling gas prices having run its course, it will probably take sustained employment growth and an acceleration in wages to lift spirits. While the economy has added 1.3 million workers to payrolls this year, wage growth has yet to break out of the narrow 2 per cent channel they've been tracking throughout the recovery.
Thursday's report meshes with the Conference Board's gauge of consumer confidence, which slumped in July by the most in almost four years as households became less upbeat about the outlook for the economy, employment and their finances, figures showed earlier this week.