WASHINGTON – Confidence in the economy eroded this month as Americans became more worried about the job market.
A business research group said Tuesday that its consumer confidence index fell to 90.4 in November, down from 99.1 in October. The index is at its lowest level since September 2014.
The share of Americans surveyed by the Conference Board anticipating more jobs in the coming months fell. Fewer people also expect to see their incomes increase. The percentage describing jobs as “plentiful” declined to 19.9 per cent from 22.7 per cent.
The decline in the confidence index comes after a robust month of hiring in October. Employers added 271,000 jobs last month as the unemployment rate settled at a healthy 5 per cent, an indication that companies see the economy as continuing its gradual, six-year expansion from the depths of the recession.
The drop in consumer confidence was a curveball for many economists, some of whom warned that the population might be reflecting concerns about hiring momentum while others could not reconcile the survey with other indicators hinting at a resilient U.S. economy.
“November’s results could be sending a cautionary signal about the key economic variable of job growth,” said Joshua Shapiro, chief U.S. economist at the consultancy MFR.
Still, the decline conflicts “with what practically every other gauge of consumer attitudes (and labour market conditions) is showing right now,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
The economy has strengthened by many measures over the past month. Hiring averaged just 145,000 in September and August, as the weight of China’s slowing economy has damaged growth prospects worldwide, the dollar has risen in value and oil prices remain low amid relatively weak demand.
U.S. economic growth appears to have improved slightly after slowing in the July-September quarter. The economy expanded at an annual rate of 2.1 per cent in those months, up from an initial estimate of 1.9 per cent but down from growth of 3.9 per cent in the prior quarter. The Atlanta Federal Reserve expects that growth domestic product will advance at a 2.3 per cent rate during the final three months of the year.
The October jobs report also indicated that wage growth is starting to improve. Average hourly earnings have advanced 2.5 per cent over the past 12 months to $25.20, the largest gain in more than seven years. Weak wage growth has tempered growth in retail sales, with auto dealers and restaurants accounting for much of the increase this year.
Economic growth in China has tilted downward this year, causing the prices for oil, coal and other commodities to tumble. The result of slower economic growth worldwide has been a stronger dollar, making U.S. goods more expensive abroad and reducing exports. The lower oil costs have also damaged the U.S. energy sector, forcing layoffs among drilling companies and leading to cutbacks on orders for pipeline and equipment.