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Consumer sentiment in US edges down amid economic concerns
[WASHINGTON] Consumer confidence in the US dipped slightly in March as concerns persisted that the world's largest economy will cool.
The University of Michigan final sentiment index for last month eased to 91 from 91.7 in February. The median projection in a Bloomberg survey of economists called for a reading of 90.5. The gauge was up from a preliminary reading of 90 as Americans grew more upbeat about their own finances, offsetting less favourable views in economic growth.
Consumers' views on the outlook for the economy deteriorated as prices at the pump climbed higher and wage gains remained modest. Continued improvement in the labour market will be needed to reassure consumers, whose spending is the primary driver of economic growth.
"We saw some fairly rapid increases in gasoline prices over the course of late February to the end March," Terry Sheehan, an economic analyst at Stone & McCarthy in Princeton, New Jersey, said before the report. "Changes in gas prices always make consumers uncomfortable. It's kind of a wake-up call to consumers that those exceptionally low prices aren't going to be holding on forever." Estimates for the Michigan survey in the Bloomberg survey of 53 economists ranged from 89 to 92.
The sentiment survey's current conditions index fell to 105.6 in March from 106.8 the prior month. The measure of expectations six months from now decreased to 81.5 from 81.9.
Americans anticipated an inflation rate of 2.7 per cent in the next year, up from 2.5 per cent in the first two months of the year. They expect prices to also rise 2.7 per cent over the next five to 10 years, compared with 2.5 per cent the previous month, which matched the lowest level since the late-1970s.
"While rising gas prices were the primary cause of an uptick in inflation expectations, it had no impact on consumers' inflation-adjusted income expectations, which remained at the highest level since 2007," Richard Curtin, director of the Michigan survey, said in a statement.
The average price of a gallon of regular gasoline reached $2 in March, from a seven-year low of $1.69 the prior month, according to the auto group AAA.
Friday's figures corroborate the weekly Bloomberg Consumer Comfort Index, which showed household attitudes softened in March on concerns about the economy and financial prospects.
The report showed 38 per cent of respondents said their incomes had recently increased, the second-highest reading since 2005. Over the past three months, consumers were more optimistic about their finances since the end of 2006.
An improving labour market is helping to underpin sentiment. Employment climbed and wages picked up in March, figures from the Labour Department showed Friday.
The 215,000 gain in payrolls followed a revised 245,000 February advance. Average hourly earnings increased 0.3 per cent from a month earlier, while the jobless rate crept up to 5 per cent as more people entered the labour force.