U.S. consumer sentiment dipped unexpectedly in early March as Americans, worried about a lack of new jobs, grew more cautious about the prospects for the economy, according to a survey released Friday.
The University of Michigan’s preliminary reading of consumer sentiment slipped to 94.1 in March from a final reading of 94.4 in February, said market sources who saw the subscriber-only report.
Economists had forecast a slight improvement to 95.0, after a dramatic decline in the index in February.
“These confidence surveys are reflecting what people are reading — that the economy is not creating jobs,” said Avery Shenfeld, senior economist at CIBC World Markets.
The dollar dipped briefly after the softer-than-expected report, while Treasuries slipped back.
Other early readings of consumer confidence for March already released also showed a decline.
Although economic growth has been robust in recent months, the lack of substantial improvement in the labor market could become a risk to the entire recovery.
In February, a scant 21,000 jobs were created across the giant U.S. economy. Analysts worry that if jobs do not pick up strongly, spending could falter. But so far, swings in consumer sentiment have had no correlation with actual spending.
Spending is expected to hold up at least until later in the tax season, when refunds from the last round of tax cuts feed through.
“The confidence numbers have not lined up well with recent quarterly spending trends, which have been more correlated with tax cuts. But it’s a worrisome sight about what spending might do when the tax cuts run out,” said Shenfeld.
Consumers’ view of current conditions was rosier, with this measure rising to 105.7 from 103.6 in February, which analysts said could suggest an improvement in the March payrolls report.
But the outlook for the economy dimmed as the consumer expectations index dropped to 86.6 from 88.5 last month.
“Consumers are more optimistic than a year ago but their optimism is still really restrained compared to where we were in the late 1990s, and it’s primarily because the job market is still lagging,” said Steven Wood, chief economist at Insight Economics.
The University of Michigan preliminary survey is based on telephone interviews with about 250 households on personal finances and business and buying conditions. The final survey at the end of the month covers about 500 households.
U.S. consumer sentiment dipped unexpectedly in early March as Americans, worried about a lack of new jobs, grew more cautious about the prospects for the economy, according to a survey released on Friday.
The University of Michigan's preliminary reading of consumer sentiment slipped to 94.1 in March from a final reading of 94.4 in February, said market sources who saw the subscriber-only report.
Economists had forecast a slight improvement to 95.0.
The current conditions index rose to 105.7 from 103.6 in February, while the consumer expectations index dropped to 86.6 from 88.5 last month.
