Washington, June 1 (BNA): US consumer confidence slipped slightly in May as persistently high inflation and rising interest rates force Americans to be more careful about buying expensive items, including cars and homes, which could limit economic growth.
Tuesday’s Conference Board survey also showed that consumers’ perceptions of the labor market have slipped slightly this month. Although the drop in confidence was small, it indicates that aggressive monetary policy actions by the Federal Reserve to slow demand are starting to have an effect, Reuters reported.
“We can never underestimate the American consumer,” said Jennifer Lee, chief economist at BMO Capital Markets in Toronto. “But plans to pull back on buying, and become a little more cautious, is something the Fed would welcome as it aims to cool demand.”
The Conference Board’s Consumer Confidence Index fell to a reading of 106.4 this month. The data for April was revised higher to show the index at 108.6 instead of the previous reading of 107.3. The index remains above its epidemic lows.
It fared much better than the University of Michigan survey, with the Consumer Confidence Index dropping to an 11-year low. The Conference Board survey focuses more on the job market.
The survey’s so-called labor market differential, drawn from respondents’ opinions data on whether jobs are plentiful or hard to come by, fell to 39.3 this month from a reading of 44.7 in April. It was the first time in a year that this measure, which is linked to the unemployment rate from the Department of Labor, was below 40.
About 12.5% of consumers saw jobs as “hard to come by,” up from 10.1% in April. In nominal terms, it indicates that unemployment may have risen from a two-year low of 3.6% in April.
Despite somewhat unfavorable consumer perceptions, the labor market is narrowing, with the Conference Board noting that they “expect labor market conditions to remain relatively strong, which should continue to support confidence in the short term.”
There were 11.5 million record jobs on the last day of March, and 4.5 million workers quit.
Stocks on Wall Street were lower. The dollar settled against a basket of currencies. US Treasury bond prices fell.