U.S. Conference Board’s index of consumer sentiment falls in September

U.S. Conference Board’s index of consumer sentiment dropped in September. The index fell to 125.1 from August’s 125.1. The reading came in below consensus expectations of 133, driven by falls in both the present situations and expectations indices.

The present situations index dropped to 169 after having reached a multi-year high in August. The fall was led by less positive assessments of current business and labor market conditions. With respect to business conditions, there was a rise in the percentage of respondents who viewed conditions as “bad”, while those who saw conditions as “good” dropped.

The labor differential index, which shows  the percentage of respondents who view jobs as “plentiful” less those who view them as “hard to get”, dropped to 33.2, after a brief spike in August. However, this index continues at one of the highest levels seen in this recovery and points to strong labor markets.

The expectations index dropped further in September, dropping to 95.8 from 106.4. This was led by downgrades to consumers’ assessments of business conditions and employment expectations and likely shows the recent escalation in trade policy uncertainty. Income expectations also softened slightly, with only 19 percent of all respondents expecting an “increase”, compared with 24.7 percent in August and 22.5 percent a year ago.

“In all, while the September report shows that confidence has weakened, it remains to be seen whether this will be sustained. In past episodes, escalations in tariff-related uncertainty (March, June) led to short-lived dips in the consumer confidence index before it recovered to earlier levels. In our view, strong labor markets and income expectations and healthy household balance-sheets should be supportive of confidence in coming months”, added Barclays