NEW YORK — The Consumer Confidence Index fell in July, breaking a three-month upswing due to job worries and rising fuel prices.
The Index fell to 103.2 from 106.2 in June. Both the Present Situation and the Expectations Indices dropped, as well, with the former falling to 118.5 from 120.8 and the latter declining to a reading of 93 from 96.4 last month.
The drop in confidence came as a surprise. Merrill Lynch economist David Rosenberg said in a preview note Tuesday before the Conference Board posted the Index’s results that the consensus was for the index to increase 0.5 points. He wrote that there could be “downside risk at 104.0,” due to such events as higher gasoline prices and the London bombings on July 7.
Lynn Franco, director of the board’s Consumer Research Center, said in a statement that July’s decline is “no cause for concern.” She said the overall state of the economy remains healthy and that consumers’ outlooks are bright, at least in the short term.
“Yet, while there is little to suggest a downturn in activity, there is also little to suggest a pickup,” Franco added.
The confidence survey is based on a representative sample of 5,000 households conducted monthly by the Conference Board.
Maury N. Harris, economist at UBS, wrote in a research note Tuesday, “Higher gasoline prices probably explain the drop-off in the July Conference Board measure. Average retail gasoline prices were $2.34 a gallon in the first half of July, when the Conference Board survey was taken, compared with $2.21, on average, in the month of June.”
John Lonski, the team managing director for the economic group at credit ratings agency Moody’s Investors Service, said in his “Talking Points” report on Tuesday that a large number of layoffs also likely weighed down on consumers.
According to Lonski, July’s 12-month average of the monthly change of the job opportunity index was the lowest since the year ended November 2004. While the latest 12 monthly changes in the job opportunity index suggest payrolls should be growing at an average rate of more than 200,000 new jobs a month, the reality is that new jobs per month are growing at a prospective rate of more than 182,000 positions for the year ended July, he noted in the report.
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The Conference Board said in July that consumers’ assessments of the labor market were mixed with those expecting more jobs to become available in the coming months edging up to 15.8 percent from 15.4 percent last month. Consumers expecting fewer jobs edged up to 16.8 percent from 16.4 percent in June.