NEW YORK – Consumer sentiment fell in August, a survey said on Friday, as a stagnant labor market made consumers a bit gloomier but Americans are still much more optimistic than they were during the Iraq war.
The University of Michigan (search) 's final August index of consumer sentiment fell to 89.3, below economists' forecasts of 90.5, from 90.9 in July. A preliminary reading on the survey mid-month came in at 90.2, sources said.
But consumer sentiment is still roughly 12 points above the nine-year low it reached in March and above its average for the last 12 months.
Concern about the job market, a pocket of the economy that is idling as other sectors are kicking into gear, likely cut into consumer sentiment, said Ken Mayland, president of Clearview Economics in Pepper Pike, Ohio, on Thursday.
New claims for jobless benefits inched higher last week, and the number of workers staying on the benefit rolls rose earlier this month, suggesting jobs are hard to get.
Also hampering confidence is gas prices, which have risen to record highs this month in large part because of strong demand from vacationers.
But despite higher gas prices and a stagnant job market, consumers are hopeful about the future, a report earlier this week said. Optimism about the future pushed another measure of consumer confidence higher in August, private research group the Conference Board (search) said on Tuesday.
Even if consumer sentiment has edged downward, Americans continue to spend heavily. Most economists reckon that consumer spending, which accounts for about two-thirds of economic activity, is a far better indicator of economic health than sentiment surveys.
A report on Friday said consumer spending grew a hefty 0.8 percent in July.
Demand does not seem to have let up in August. Ford Motor Co. (F) said on Thursday that it is on track to sell more cars and light trucks in August than it has in any other month this year.
The University of Michigan consumer sentiment survey is based on telephone interviews with 500 U.S. households over the course of the month on personal finances and business and buying conditions. The preliminary survey, released about midway through the month, is based on the first 250 interviews.
The survey's current conditions index, which tracks consumers' attitudes about their present financial situation, fell to a final reading of 99.7 from 102.1 in July. The expectations index, which gauges the 12-month outlook, decreased to 82.5 from 83.7 in July.