NEW YORK – U.S. consumer confidence (search ) fell sharply in August, breaking four straight months of gains, as a slowdown in job creation and rising oil prices weighed on sentiment.
Whether the erosion of confidence in August is a harbinger of a further slowdown in U.S. economic growth or simply a delayed reflection of the soft spot the economy hit this summer is not clear. But analysts say it is clear consumers are taking note of the slowing pace of growth.
The Conference Board (search ), a private forecasting group, said its measure of consumer confidence fell to 98.2 from a revised 105.7 in July. Economists polled by Reuters had forecast a fall to 103.5.
"The level of consumer optimism has fallen off and caution has returned," Lynn Franco, director of the Conference Board's Consumer Research Center said in a statement. "Until the job market and pace of hiring picks up, this cautious attitude will prevail."
The present situation index fell to 100.7 from 106.4, while the expectations index fell to 96.6 from 105.3.
The percentage of consumers who said jobs were hard to get was little changed at 25.8 percent, compared with 25.7 percent in July. But consumers saying jobs are plentiful decreased to 18.1 percent from 19.7 percent.
The economy generated just 78,000 jobs in June and 32,000 in July, well below levels deemed necessary for a self-sustaining economic recovery. Most analysts expect job creation to have picked up in August, however, with a consensus forecast for 150,000 new jobs.
"The responses on confidence suggest it was the view that things have stopped getting better rather than things are getting worse," said Drew Matus, senior financial economist at Lehman Brothers. "The economy is not collapsing, it's just that the pace of growth has slowed enough that people have noticed it."
Some analysts consider confidence data a predictor of consumer spending, which accounts for about two-thirds of U.S. economic activity, although others say the say the correlation between confidence and spending is not exact.
Consumer spending had rebounded sharply in July, bolstering hopes that the U.S. economy was recovering from its recent soft spot.
"The recent sharp jump in June and July (in consumer confidence) may have showed an overstatement in confidence," said Lynn Reaser, chief economist at Banc of America Capital Management. "Consumer confidence has improved from a year ago, but consumers are cautious about the present and future of the economy."