Job woes slam confidence

Consumer confidence reading sinks to lowest since May on worries about jobs.
August 31, 2004: 10:43 AM EDT



NEW YORK (CNN/Money) - Consumer confidence plunged in August, hurt by worries about jobs, a research group said Tuesday, in a report that fell far below forecasts by private economists.

The Conference Board, a business research group, said its confidence index sank to 98.2 from a reading of 105.7 in July. Economists surveyed by Briefing.com forecast that the index would slip to only 103.4. It was the lowest reading since May and the biggest drop since February.

Consumer confidence is an important indicator of consumer willingness to spend, especially on big-ticket items. About two-thirds of the nation's economy is driven by consumer spending.

The sharp drop followed four straight months of gains in consumer confidence.

But it also follows much weaker-than-expected employment reports for June and July. The government's August employment report is due Friday.

"The slowdown in job growth has curbed consumers' confidence," said Lynn Franco, director of he Conference Board's Consumer Research Center. "The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail."

Those saying jobs are "plentiful" slumped to 18.1 percent from 19.7 percent, while those claiming jobs are "hard to get" was virtually unchanged at 25.8 percent.

The consumer outlook for the employment market also worsened. The survey found 15.4 percent expecting fewer jobs six months from now, up from 13.5 percent in the July survey. Those expecting more jobs six months from now fell to 16.2 percent from 19.5 percent.

Consumers were also less optimistic about the general business climate. The survey found 23.2 percent who believe business conditions are "good," down from 25.2 percent. Those claiming conditions are "bad" rose to 20.1 percent from 19.1 percent.

The board surveys 5,000 households for its monthly report.