After months of resilience in the face of rising prices, the mood of consumers soured in May, while activity eased at U.S. factories and construction sites. Here's a look at this week's economic developments and how they may impact your business.
Consumer Confidence Sags
After hitting a four-year high in April, consumer confidence declined in May amid growing concerns over a tighter labor market and rising prices, the Conference Board said Tuesday.
Out of 5,000 households surveyed nationwide in May, only 28 percent described current economic conditions as "good," compared to 29.7 percent in April, while those expecting conditions to get worse rose to 13.2 percent from 9.3 percent, the New York-based private research group said.
A larger share also felt jobs were harder to get and not as plentiful in May, with fewer expecting incomes to rise in the months ahead, the group said.
Those fears dragged down the group's expectations index, which gauges the economic outlook over the next six months, to levels "not seen since the aftermath of the hurricanes last summer," Lynn Franco, the group's director of consumer research, said in a statement.
"Looking ahead, the expectations index bears close watching, as it is often a harbinger of times to come," Franco said.
So far this year, consumers have shrugged off higher prices — including a 37 percent boost in average gas prices over last year to over $2.80 per gallon, according to the Energy Department — and continued spending at an annual growth rate of 5.2 percent over the first quarter, the Commerce Department reported last week.
Still, in the week ending May 27, sales at U.S. chain stores nationwide were down by 1 percent from the previous week, the International Council of Shopping Centers reported Thursday. On a year-to-year basis, however, sales have grown by 3.6 percent, the report said.
Construction, Home Sales Down
Construction spending dropped by 0.1 percent in April, the Commerce Department said Thursday. The declines were blamed on a 1.1 percent decline in home construction spending, the department said.
In a separate report released Thursday, pending home sales were shown to be down in April, falling by 3.7 percent over March and 11.7 percent from the same period last year, the National Association of Realtors said.
The trend in pending homes sales, which gauges the number of sales expected to be finalized within two months, "probably gives us the best measure for the overall direction of the housing market, which is falling from historic highs," David Lereah, the group's chief economist, said in a statement.
Factory Activity Slows
Rising costs also slowed manufacturing growth in May from a five-month high in April, the Institute for Supply Management said Thursday.
Coupled with declines in new orders and employment, the ISM Manufacturing Index dipped to 54.4 from 57.3 the previous month, the group said. Readings over 50 indicate growth in the sector.
New claims for jobless benefits rose by 7,000 to 336,000 in the week ending May 27, the Labor Department reported Thursday. Those continuing to draw benefits was also up, to 2.433 million from 2.414 million the previous week.
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