US consumer confidence falls on labor market conditions

The Conference Board's index of consumer confidence fell to 97.6 in October, posting an unexpected decline against the forecast (104.0) and consensus expectations (102.9) for a little-changed reading. Most of the deterioration in sentiment was in consumers' assessment of present economic conditions (112.1, previous: 120.3), while expectations of future activity remain broadly intact (88.0, previous: 90.8).

Labor market developments were a key factor leading consumers to mark down their confidence in current activity. The labor market differential, measured as the share of consumers who thought jobs were plentiful less the share who thought  they were hard to get, fell to -3.6 in October (previous: -0.1).

The indicator of labor market slack has rapidly improved in recent months and despite this morning's decline, the differential remains above its July level. Business conditions slipped modestly as well, with the net share of consumers noting an improvement in present conditions falling from the post-recession high of 11.7 in September to 8.2 in October.

Expectations, however, were broadly stable across the board. Purchasing plans for homes (6.3, previous: 5.8) and major appliances (49.3, previous: 48.8) rose on the month, while auto buying sentiment moved lower (10.6, previous: 13.1).

"We view the unexpected decline in confidence in October as normal volatility around at trend that remains constructive for the US consumer", says Barclays.