- US consumer confidence fell sharply to 71.2 in October 2013 from 80.2 in the previous month. Market expectations had been for a reading of 76.0.
- The current employment differential deteriorated to -22.2 from -22.0 in September as consumers were increasingly pessimistic about labour market conditions.
- While today’s reported decline in sentiment provided a discouraging starting point for the fourth quarter of 2013, it followed the headline measure reaching a near six-year high in the third quarter and coincided with the 16-day government shutdown and rising mortgage interest rates. Given the temporary nature of the shutdown along with continued home price advances, the downward effect on sentiment is expected to ease; however, the negative hit to consumer sentiment is expected to limit a strengthening in growth in the final quarter of this year.
- In a separate release, the seasonally adjusted S&P/Case-Shiller 20-City Composite measure of US home prices rose 0.9% in August. The annual pace of increase in the unadjusted index was 12.8% to mark the fastest pace of year-over-year price growth since February 2006.
The Conference Board’s measure of US consumer confidence fell sharply to 71.2 in October 2013, which was well below expectations for a 76.0 reading, from an upwardly revised 80.2 level in September (previously reported as 79.7). The weakness in sentiment in October reflected consumers being less optimistic about the short-term outlook, with the “expectations for six months hence” component plunging 13.2 points to 71.5, which was its lowest level since March. As well, consumers’ appraisals of current conditions deteriorated in the month as the “present situation” component fell 2.8 points to 70.7.
With respect to labour market conditions, those saying jobs were “plentiful” edged down to 11.3% in October, compared to 11.4% in September, while those saying jobs were “hard to get” rose to a four-month high of 35.8% (from 33.6% in the previous month). These combined resulted in deterioration in the employment differential (those saying jobs are “plentiful” minus respondents saying jobs are “hard to get”) to -22.2 in October from -22.0 in September. In terms of the job market outlook, the assessment was more pessimistic as the share of respondents expecting fewer jobs was greater than those expecting more jobs (22.7% compared to 15.3%).
While today’s reported decline in sentiment provided a discouraging starting point for the fourth quarter of 2013, it followed the headline measure reaching a near six-year high in the third quarter and coincided with the 16-day government shutdown and rising mortgage interest rates. Given the temporary nature of the shutdown along with continued home price advances, the downward effect on sentiment is expected to ease; however, the negative hit to consumer sentiment is expected to limit a strengthening in growth in the final quarter of this year.
In a separate release, the seasonally adjusted S&P/Case-Shiller 20-City Composite US home price index rose 0.9% on a month-over-month basis in August, thereby beating market expectations for a 0.7% gain. The measure is now at its highest level since August 2008. The unadjusted index rose 12.8% on a year-over-year basis in August, therein building on the 12.3% gain in the previous month and marked the fastest pace of year-over-year price growth since February 2006.
RBC