Job-market worry hurts confidence
Americans’ concern about the job market led to an erosion in consumer confidence in October, a report Tuesday showed.
News about job losses at auto plants and other manufacturers is contributing to persistent worries among workers about employment, economists say.
“I think there is enough negative news on the employment front to offset the good stuff that is happening,” said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis.
The Conference Board said consumer confidence edged down to 105.4 from a revised 105.9 in September, as job worries offset the benefits of falling gasoline prices. Analysts had expected a reading of 107.8.
News of job cuts in recent months has come from major household names such as chip maker Intel Corp., Goodyear Tire & Rubber Co., Ford Motor Co. and AOL, the Time Warner Inc. online unit formerly known as America Online.
“October’s dip in confidence was prompted by consumers’ mixed assessment of present-day business conditions and a less favorable view of the job market,” said Lynn Franco, director of the Conference Board Consumer Research Center.
“Consumers’ short-term expectations posted a slight improvement, but the outlook for the labor market remains mixed.”
Franco said October’s readings hinted at moderate economic growth for the rest of the year and into the first few months of 2007.
The private research group’s present situation index, which measures how shoppers feel about economic conditions, fell to 124.7 from 128.3.
The expectations index, which measures consumers’ outlook for the next six months, rose to 92.6 from 91.0.
The consumer confidence report -- derived from responses through Oct. 24 to a survey mailed to 5,000 households in a consumer research panel -- showed that the view of labor market conditions was less positive than in September. Consumers saying jobs were “plentiful” declined to 25.8% from 26.2%. Those claiming jobs were “hard to get” increased to 22% from 20.9% in September.
The outlook for the labor market, however, was mixed. Those expecting more jobs to become available in the coming months edged up to 15.2% from 14.7%, while those anticipating fewer jobs also increased to 17.5% from 16.5%.
The proportion of consumers expecting their income to increase in the months ahead edged down to 19.6% from 20.2% in September.
“U.S. labor markets remain historically tight and wage pressures continue to mount, particularly for the most skilled workers. This is something the Fed is keeping its eye on,” said Michael Gregory, an economist with BMO Capital Markets.
In a separate report, the Labor Department reported that its employment cost index was up 1% in the third quarter, led by a big jump in the cost of employee benefits such as health insurance and pensions.
It was the biggest quarterly increase since the second quarter of 2004, when the index also rose 1%. It rose 0.9% in the April-June period.
