Following a small increase in April, consumer confidence decreased slightly in May, according to the Conference Board.
The Conference Board’s Consumer Confidence Index now stands at 106.4 (with a 1985 baseline of 100), down from 108.6 in April, which saw an upward revision from an initial reporting of 107.3.
The University of Michigan’s latest Consumer Sentiment Index witnessed similar trends as well. It recorded consumer sentiment in May at 58.4, a 10.4% drop from April’s 65.2 figure, putting it at virtually the same level of sentiment seen in March, the University of Michigan said. “This recent drop was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concerns over inflation,” Surveys of Consumers Director Joanne Hsu said.
Also seeing a decline from April is the Conference Board’s Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions. That index is now at 149.6 vs. 152.9 in April. Furthermore, the company’s Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions—declined to 77.5 from 79.0.
“The decline in the Present Situation Index was driven solely by a perceived softening in labor market conditions. By contrast, views of current business conditions—which tend to move ahead of trends in jobs—improved. Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2,” Lynn Franco, senior director of economic indicators for The Conference Board, said in a release.
Consumers’ appraisal of current business conditions improved in May, with 21.1% of consumers saying business conditions were “good” vs. 20.8% in April, and 20.7% of consumers saying business conditions were “bad” vs. 22.2%.
Consumers’ assessment of the labor market, however, was less positive, the Conference Board noted. More than half (51.8%) of consumers said jobs were “plentiful,” down from 54.8% in April, and 12.5% of consumers said jobs are “hard to get,” up from 10.1%.
“That said,” Franco added, “with the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead. They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.”
The Conference Board noted that consumers’ pessimism about the short-term business conditions outlook grew in May, with 24.9% of consumers expecting business conditions to worsen, up from 21.7% in April.
Meanwhile, consumers were mixed about their short-term financial prospects, with19% of consumers expecting their incomes to increase, up from 17.8% in April. Conversely, 14.5% expect their incomes will decrease, up from 13.2% in April.