Americans are losing faith in the jobs market.
The Conference Board’s consumer-confidence index for November, released Tuesday, unexpectedly fell to 90.4, a 14-month low. Economists had expected the index to rise to 99.5 in November, from an upwardly revised 99.1 print (from 97.6) in October.
The Conference Board’s Lynn Franco explained in the report:
The decline was mainly due to a less favourable view of the job market. Consumers’ appraisal of current business conditions, on the other hand, was mixed. Fewer consumers said conditions had improved, while the proportion saying conditions had deteriorated also declined.
Heading into 2016, consumers are cautious about the labour market and expect little change in business conditions.”
The report showed that the share of consumers expecting more jobs in the coming months fell to 11.6% from 14.4%, while those expecting fewer jobs rose to 18.7% from 16.6%.
Consumers were also more downbeat about chances that their wages would rise.
The labour-differential index, which measured jobs plentiful minus jobs hard to get, fell to -6.3 from -1.9.
At first glance, these sentiments from respondents to The Conference Board’s report may be jarring.
Just last month, the US economy added 271,000 jobs, the strongest pace of employment growth this year, and the unemployment rate fell to a seven-year low of 5%.
The University of Michigan’s equivalent consumer-sentiment report, released earlier this month, was also a lot more upbeat than The Conference Board’s.
And many economists were confident that the pace of jobs growth is set to strengthen in the coming months, after the October rebound from a slowdown in the preceding two months.
“While weaker consumer expectations pose downside risks for consumption growth, confidence surveys can be noisy from month to month,” Barclays economists stressed in a client note.
But it’s worth noting that the trend in the pace of jobs growth this year has been mostly downward.
The second estimate of third-quarter gross domestic product released earlier Tuesday showed that consumer spending continued to be an engine of US economic growth.
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