Boo! Confidence posts surprise drop
Decline in gas prices not enough to boost sentiment; forecasts were for an increase.
October 31 2006: 10:40 AM EST
NEW YORK (CNNMoney.com) -- Lower energy prices weren't enough to lift consumer confidence in October, a business research group reported Tuesday.
The Conference Board said its index of consumer confidence index fell to 105.4 from a revised 105.9 in September. Confidence is closely watched since it tends to influence consumer spending, which in turn fuels about 70 percent of the nation's economy.
The research group said its survey found that consumers were mixed on current business conditions and had a less favorable view of the job market. Economists surveyed by Briefing.com had forecast the index would rise to 107.8.
"Consumers' short-term expectations posted a slight improvement, but the outlook for the labor market remains mixed," Lynn Franco, director of group's surveys, said in a statement. "Overall, this month's readings continue to suggest a moderate pace of economic growth and more of the same for the first few months of 2007."
Wal-Mart: Cheap versus chic
Consumers' view of current business conditions fell to 124.7 from 128.3 in September. But the index measuring expectations for six months out rose to 92.6 from 91.0.
Consumers saying jobs are "plentiful" fell to 25.8 percent this month from 26.2 percent in September Those claiming jobs are "hard to get" rose to 22.0 percent from 20.9 percent.
Those expecting more jobs to become available in the coming months edged up to 15.2 percent from 14.7 percent, but those expecting fewer jobs also rose to 17.5 percent from 16.5 percent.
The government's job report for October is due Friday morning, and economists forecast the economy added 125,000 jobs this month after a disappointing gain of only 51,000 jobs in August. The unemployment rate is expected to stay at 4.6 percent.
Meanwhile, consumers aren't banking on a tighter job market to help their paychecks. Those expecting their incomes to increase in the months ahead edged down to 19.6 percent from 20.2 percent in September.
Consumer spending has held up relatively well this year, though Wal-Mart Stores (Charts), the nation's biggest retailer, has been plagued by weak sales recently. Saturday it reported sales at U.S. stores open at least a year, a closely watched retail measure known as same store sales, rose a disappointing 0.5 percent in October, following a 1.3 percent gain in September.
Other major retailers report October sales Thursday. As a group, the big chains are forecast to post a 4.2 percent gain in same-store sales, down from a 6.3 gain in September. |
