Job fears take toll on confidence in US

Click to follow
The Independent Online

Optimism among American households took an unexpected dive last month in a sign the remorseless toll of job cuts has finally dented confidence.

Optimism among American households took an unexpected dive last month in a sign the remorseless toll of job cuts has finally dented confidence.

The Conference Board, a private business research group, said its monthly index of consumer confidence had fallen in August in the face of forecasts for a rise. It warned this could be the first indication retail sales growth was about to slow.

"The deteriorating US job market dampened consumer spirits this month," Lynn Franco, director of the Conference Board's consumer research centre, said. "The nation's ... unemployment numbers now bear watching, since continued weakness in the job market could translate into slower consumer spending."

Deere & Co, a farm equipment manufacturer, became the latest US company to announce redundancies, saying it would cut 1,975 more jobs. More than 350,000 job cuts have been announced worldwide in the recent months as growth slows.

The Conference Board said the component of the index that tracks consumers' present situation fell in August to it lowest level since April 1997.

Stocks fell after the report, with the Dow Jones declining 1.2 per cent to 10,382 points. Analysts said it raised the chances of a quarter-point cut in interest rates – the eighth this year – when the Federal Reserve meets on 2 October.

Carol Stone, deputy chief economist at Nomura Securities in New York, said: "People's thoughts about the jobs market really did deteriorate."

The dip in consumer confidence came despite the rollout of President George Bush's tax rebate to consumers. The US Treasury has mailed out more than half of the 90 million cheques, totalling more than $20bn (£14bn) out of $38bn, in an attemptto give consumers extra incentive to spend and help boost the economy.

Comments