June 26 (Bloomberg) -- Confidence among U.S. consumers declined in June to a five-month low as Americans became less sanguine about the outlook for the labor market and incomes.
The Conference Board’s index dropped for a fourth straight month, to 62 from a revised 64.4 in the prior month, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called for a reading of 63.
The figures show falling gasoline prices are having limited effect at the same time hiring and income growth cools. The risk of a cutback in consumer spending, which accounts for about 70 percent of the economy, helps explain the Federal Reserve’s decision last week to extend a policy aimed at holding down borrowing costs.
“The employment situation continues to weigh on consumer minds,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly forecast the confidence index. “Usually consumers react to falling gasoline prices by increasing their spending, but this time around it looks like they’re a little bit cautious.”
Estimates for the gauge of sentiment ranged from 58 to 66.8 in the Bloomberg survey of 69 economists. The measure averaged 53.7 during the 18-month recession that ended in June 2009.
Stocks pared gains after the figures, with the Standard & Poor’s 500 Index climbing less than 0.1 percent to 1,314.45 at 10:24 a.m. in New York.
Another report today showed home prices in 20 U.S. cities fell at a slower pace in the 12 months ended in April, showing improvement in the industry that precipitated the last recession. The S&P/Case-Shiller index of property values dropped 1.9 percent from a year earlier, the smallest decrease since November 2010, the group reported in New York.
Today’s Conference Board measure compares with readings from the Bloomberg Consumer Comfort Index, which dropped last week after a four-week climb. The Thomson Reuters/University of Michigan’s preliminary measure fell in June to 74.1, its lowest level this year.
The Conference Board’s gauge of expectations for the next six months fell to 72.3, the lowest level since November, from 77.3 a month earlier. The measure of present conditions climbed to 46.6 from 44.9 a month earlier.
The percent of respondents expecting more jobs to become available in the next six months declined to 14.1, the lowest this year, from 15.4 the previous month. The proportion who expect their incomes to rise over the next six months dropped to 14.8 percent from 15.7 percent.
“If this trend continues, spending may be restrained in the short term,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “The improvement in the present situation index, coupled with a moderate softening in consumer expectations, suggests there will be little change in the pace of economic activity in the near term.”
The share of consumers who said jobs are currently plentiful rose to 7.8 percent from 7.5 percent. Those who said jobs are hard to get climbed to 41.5 percent from 40.9 percent.
Buying plans were mixed in June. The share of households planning to buy autos was unchanged from a month earlier, while fewer Americans said they intended to purchase major appliances. More consumers indicated they planned to buy a house in the next six months as lower mortgage rates make properties more affordable.
Employment growth and wage gains have been cooling. Payrolls climbed by 69,000 in May, the smallest increase in a year, Labor Department figures showed June 1. Average hourly earnings increased 1.7 percent in the 12 months ended in May, the smallest increase since December 2010.
The jobless rate last month rose to 8.2 percent from April’s 8.1 percent. It has held above 8 percent for 40 consecutive months, the longest stretch of such elevated levels in the post-World War II era.
“On the consumer side, the macro trends continue to be difficult,” David West, chief executive officer of San Francisco-based Del Monte Foods Co., said on a June 22 earnings call. “While basket sizes aren’t changing all that much, the individual items in the basket are all the more expensive and the consumer is making choices.”
To help combat weaker economic growth, Fed officials last week said they’ll expand Operation Twist, a program to replace short-term bonds with longer-term debt, by $267 billion through the end of 2012.
Policy makers also cut their expectations for growth in 2012 to a range of 1.9 percent to 2.4 percent, down from an April prediction of 2.4 percent to 2.9 percent. The forecasts have been lowered in five of the six economic projections since January 2011, when most central bankers predicted the economy would grow 3.5 percent to 4.4 percent in 2012.
One of the bright spots for the consumer has been falling gasoline prices. The price of a gallon of gas has declined 54 cents since reaching a high of $3.94 in April, according to AAA, the nation’s biggest auto group.