Americans grew concerned in April that jobs have become more difficult to land, prompting an unexpected drop in confidence from a six-year high.
The Conference Board's sentiment index decreased to 82.3 from 83.9 a month earlier, a reading that was stronger than initially estimated and the highest since January 2008, the New York-based private research group said today. Another report showed home prices in 20 cities rose at a slower pace.
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Smaller gains in housing and stocks and higher prices at the gas pump help explain why households' assessments of the economy aren't improving. Nonetheless, consumers held out hope that the employment outlook will brighten enough later this year to generate the wages needed to spark spending.
"Consumer attitudes are improved, but still quite muted relative to where you'd hope they'd be in a healthy recovery," said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, whose projection of an 82 reading was among the closest in the Bloomberg survey. "The issues in the job market aren't really on the layoff side, they're on the hiring side."
Stocks rose as Internet shares rallied for the first time in five days and results from Merck & Co. to Sprint Corp. topped estimates. The Standard & Poor's 500 Index advanced 0.5 percent to 1,878.33 at the close in New York. The gauge is up 1.6 percent this year.
The Conference Board's gauge of present conditions dropped to a three-month low in March, while the barometer of consumer expectations for the next six months was little changed.
"Consumers assessed current business and labor-market conditions less favorably than in March," Lynn Franco, director of economic indicators at the Conference Board, said in a statement. "However, their expectations regarding the short- term outlook for the economy and labor market held steady."
The median forecast in a Bloomberg survey of 78 economists called for a consumer confidence reading of 83.2. Estimates ranged from 80.8 to 87.8 after a previously reported March reading of 82.3. The Conference Board's measure averaged 53.7 in the recession that ended in June 2009. It's averaged 63.2 during the current expansion.
The fewest respondents in three months said jobs were currently plentiful, while more said jobs were hard to get. The spread between those who said work opportunities are easier to come by and those who said they're currently scarce worsened in April.
Americans were still optimistic the labor market will see better days. The proportion of consumers who said jobs would become more plentiful in the next six months climbed to the highest since January. In addition, the share expecting their incomes to rise increased to an eight-month high in April.
Payrolls climbed by 192,000 workers in March after a 197,000 increase the previous month that was larger than first estimated, the Labor Department said earlier this month. Private payrolls, which exclude those at government agencies, exceeded the pre-recession peak for the first time.
Employers added 215,000 workers in April, according to the Bloomberg survey median before a May 2 report. The unemployment rate is projected to fall to 6.6 percent from 6.7 percent, according to the survey.
The figures on sentiment also showed fewer people plan to buy automobiles in the next six months as prices at the pump climbed. Gasoline prices averaged $3.69 a gallon yesterday, close to the highest level since March of last year, according to figures from AAA, the largest U.S. motoring organization.
Slower home-price appreciation may be starting to stabilize a housing market that's been weakening since the middle of last year. The Conference Board's report showed more Americans said they planned to purchase previously owned homes in the next six months.
Today's report from S&P/Case-Shiller in New York showed an index of property prices in 20 U.S. cities increased 12.9 percent from February 2013, the smallest advance since August, after a 13.2 percent gain in the year ended in January.
Growth in property values eased as rising mortgage rates and severe winter weather restrained demand for homes in the first few months of the year.
"The days of very robust home-price gains are over," said Thomas Costerg, a New York-based economist at Standard Chartered Plc, who projected the index would rise 12.8 percent. "Elevated price gains are a headwind, especially for first-time buyers. Prices will slow going forward, and the housing market needs that to recalibrate supply and demand."
A pickup in confidence about the economy may encourage more Americans to travel this summer, providing a spark for companies such as Choice Hotels International Inc., whose brands include Comfort Inn and Econo Lodge.
"We're off to a very strong start for 2014," Stephen Joyce, president and chief executive officer, said on an earnings call yesterday. "Consumers are more upbeat about future job growth in the overall economy. Reports show that consumers are expecting the economy to continue improving and rising expectations suggest the economy may pick up some more momentum over the next few months."
The Silver Spring, Maryland-based company said revenue per available room rose 5.6 percent in the first quarter as occupancy rates increased.
The pickup in occupancy was due in part to an "improving U.S. economy as well as declining unemployment rates," David White, the company's chief financial officer, said on the call.
Signs the economy is emerging from a slowdown in first- quarter demand indicate Fed policy makers will stick to plans for a gradual reduction in the asset purchases.
At the same time, the central bankers have pledged to keep interest rates near zero until the jobless rate falls further and inflation rises toward a 2 percent goal.
--With assistance from Chris Middleton in Washington
To contact the reporter on this story: Michelle Jamrisko in Washington at mjamriskobloomberg.net To contact the editor responsible for this story: Carlos Torres at ctorres2bloomberg.net Vince Golle