Consumer Confidence Index Steps Back

The Conference Board, New York, said its Consumer Confidence Index dipped in October after surging the previous two months.

The Index fell to 98.6, down from 103.5 in September. The Present Situation Index decreased from 127.9 to 120.6, while the Expectations Index declined from 87.2 last month to 83.9.

“Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace,” said Lynn Franco, Director of Economic Indicators with The Conference Board.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said despite the pullback, confidence remains at levels consistent with consumer spending continuing at a decent clip in the fourth quarter.

“Expectations for stronger income growth should also provide support to spending,” Vitner said. “The net share of households expecting income to increase verses decrease rose to a 10-month high.”

Consumers’ appraisal of current conditions softened in October. Those saying business conditions are “good” decreased moderately from 27.7 percent to 26.2 percent, while those saying business conditions are “bad” increased from 15.8 percent to 17.7 percent. Consumers’ assessment of the labor market was also less positive than last month. Those stating jobs are “plentiful” decreased from 27.6 percent to 24.3 percent, while those claiming jobs are “hard to get” declined marginally from 22.3 percent to 22.1 percent.

Consumers’ optimism regarding the short-term outlook was somewhat less favorable in October. The percentage of consumers expecting business conditions to improve over the next six months decreased from 17.0 percent to 16.0 percent, while those expecting business conditions to worsen increased from 10.8 percent to 12.2 percent.

Consumers’ outlook for the labor market was also less optimistic than in September. The proportion expecting more jobs in the months ahead decreased from 15.7 percent to 13.1 percent. However, those anticipating fewer jobs declined from 18.1 percent to 17.0 percent. The percentage of consumers expecting their incomes to increase was unchanged at 17.5 percent, while the proportion expecting a decline decreased from 10.4 percent to 9.8 percent.