Consumer confidence in the economy cooled last week from its highest level in more than five years, according to the latest Bloomberg Consumer Confidence Index.
The reading dropped to minus 26.6 for the period ended Aug. 11, the first decline in four weeks. The decline indicates that recent gains in confidence remain fragile, and may be reversed should interest rates continue to rise or if fuel costs jump. Still, rising stock prices and property values continue to help consumers' personal wealth and support consumer spending, which accounts for 70% of the economy.
All three components of the comfort index weakened last week, with the measure of personal finances falling to its lowest mark in more than two months. The index of Americans views of their finances declined to 3.2, the lowest since the period ended June 9, from 6.6.
The measure has been positive for 18 consecutive weeks. A related gauge of the buying climate dropped for the first time in three weeks to minus 35.8 from minus 32 as fewer consumers said the time was right to buy needed items.
Earlier this month, Labor Department data showed uneven improvement in the job market as employers added fewer workers than forecast in July, even as the jobless rate fell to a four-year low as more Americans found part-time positions. Payrolls rose by 162,000, the least in four months, and unemployment fell to 7.4% from 7.6%.
The gap in sentiment between renters and homeowners widened last week, as did the gap between full-time and part-time workers. The index for renters declined for the first in five weeks to minus 34.8 from minus 28.1. Confidence among homeowners cooled after a one-week improvement to minus 21.9 from minus 20.5.
Sentiment among full-time workers fell to minus 15.1, the lowest in two months, from minus 11.5 the week earlier. The index among those employed part-time decreased to minus 38.5, the weakest in more than a month, from minus 27.9.
The Bloomberg Consumer Comfort Index conducts telephone surveys with a random sample of 1,000 consumers ages 18 and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate. The margin of error for the headline figure is 3 percentage points.
The percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks. The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative.