U.S. consumer confidence dropped sharply in June, as concerns over the sustainability of economic recovery and the outlook for jobs brought one closely watched indicator's three-month streak of consecutive gains to an end.
Separately, U.S. home prices rose in April from a month earlier, according to the S&P Case-Shiller home-price indexes, boosted by the expiration of the federal first-time home-buyer tax credit. They had fallen for six straight months before the most-recent increase.
The Conference Board, a private research group, said its index of consumer confidence for June dropped to 52.9 compared with the 62.7 seen in May, a figure that was revised down from a previously reported 63.3. The current month's reading was far below economists' expectations for 62.5, according to a survey conducted by Dow Jones Newswires.
The present situation index, a gauge of consumers' assessment of current economic conditions, fell to 25.5 from a 29.8 the prior month. May's result was previously reported as 30.2.
Meanwhile, consumer expectations for the state of economic activity over the next six months plunged to 71.2 from 84.6 in May, previously reported as 85.3.
The drop in the expectations index more than halved the steep 22.4 point-gain it had seen in the three months since February, an increase that had put it to its highest level since an 89.2 reading in August 2007, just before the last recession began.
"Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence," said Lynn Franco, director of the Conference Board Consumer Research Center. "Until the pace of job growth picks up, consumer confidence is not likely to pick up."
The June survey was conducted after the release at the beginning of the month of May payrolls data from the Bureau of Labor Statistics that showed a far-lower-than-expected rate of jobs growth in the private sector.
This was reflected in an increase in the percentage of respondents who think jobs are "hard to get" to 44.8% from an upwardly revised 43.9% in May. Meanwhile, those who think jobs are "plentiful" continued to fall, dropping to 4.3% from 4.6% in May.
Expectations about labor markets in the future also deteriorated. The percentage of consumers expecting more jobs in the months ahead dropped from 20.2% in May to 16.0% in June, below even its April reading of 17.7%. The proportion expecting fewer jobs rose to 11.4% from 10.6% last month.
April Home Prices Jump
Home prices rebounded some last summer, following stock-market gains, after dropping off sharply for several years. But they began sliding month to month again in the fall. The expiration of the first-time home-buyer tax credit has drained some of the housing market's demand the past two months, and mounting concern over European finances and May's "flash crash" have prompted skepticism about the economy.
Housing analysts have recently grown gloomier about the outlook for home prices as sales slump, with a survey released last week by MacroMarkets LLC finding that 56% of 106 economists and analysts surveyed expecting home prices to decline this year, up from 40% a month ago.
The Case-Shiller 10-city index climbed 0.7% compared with March, while the 20-city index rose 0.8%. The indexes "do show some improvement with higher annual increases than in March's report," said David M. Blitzer, chairman of S&P's index committee, though he noted that "many of the gains are modest and somewhat concentrated in California."
The indexes showed prices in 10 major metropolitan areas jumped 4.6% in April from a year earlier, while the index for 20 major metropolitan areas increased 3.8% year over year. On that basis, San Francisco saw the biggest jump in prices, rising 18%, with San Diego up 12% and Minneapolis rising 9.5%. The biggest decliner remained Las Vegas, which dropped 8.5%.
Month-to-month gainers were headlined by Washington, D.C., which rose 2.4%. Only two of the 20 major metropolitan areas, Miami and New York, saw month-to-month declines.
Article Source : http://www.meattradenewsdaily.co.uk/news/070710/usa___the_recessions_not_over_till_its_over.aspx
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