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[WASHINGTON] Consumer confidence declined in August to a three-month low as recent stock-market turbulence weighed on Americans' outlook for the US economy in the coming year.
The University of Michigan consumer sentiment final index for the month fell to 91.9 from 93.1 in July. A measure of prospects for the economy over the next 12 months was the weakest since November.
Confidence withered in the second half of the month after US stocks plunged on concerns about the Chinese economy. A resilient labor market and cheaper fuel may nonetheless keep sentiment from slumping, which will bolster consumer spending.
"The stock-market decline may be showing up in the data," Gus Faucher, an economist at PNC Financial Services Group Inc in Pittsburgh, said before the report. Still, with steady job gains, "we will see generally improving sentiment over the course of 2015, particularly once the stock market settles down." The group surveyed 64 more people than usual in August in order to better capture the reaction to the market events, according to Richard Curtin, director of the Michigan Survey of Consumers. Typically, 500 consumers are polled every month.
Estimates of the 63 economists in a Bloomberg survey for the sentiment measure ranged from 90 to 95.5. The gauge averaged 94.6 this year, through July, and 84.1 in 2014.
The Michigan sentiment survey's index of expectations six months from now dropped to 83.4, the lowest since November, from 84.1 last month. The initial August reading was 83.8.
The gauge of current conditions, which measures Americans' views of their personal finances, declined to a three-month low of 105.1 in August from 107.2. The preliminary figure was 107.1.
If past stock-market corrections are any indication, the August setback in sentiment will be short-lived, Mr Curtin said in a statement, comparing the latest move to a similar slump in 1987 that was also influenced by events abroad.
"Consumers quickly dismissed the 1987 episode since they thought it would have little impact on their own jobs and incomes," Mr Curtin said. "The same response is most likely to reoccur since consumers continued to report very positive income and job gains in the most recent survey, even after the stock market volatility began." Americans expected an inflation rate of 2.8 per cent in the next year, unchanged from July. Over the next five to 10 years, they expect a 2.7 per cent rate of inflation, compared with 2.8 per cent in the previous month.