US consumer confidence declines in October, weighed down by views on jobs market

Americans' views on the economy, jobs and inflation all soured more than expected in October, the results of a closely followed survey revealed.

The Conference Board's consumer confidence index retreated from a reading of 107.8 for September to 102.5 in October.

Economists had penciled in a reading of 105.0.

Lynn Franco, senior director of economic indicators at The Conference Board, said the survey results suggested that economic growth slowed at the beginning of the fourth quarter.

She also highlighted the decline in the sub-index for consumer expectations from 79.5 to 78.1, noting that readings below 80.0 points were associated with recession.

The sub-index linked to current business and labor market conditions meanwhile fell from 150.2 to 138.9.

Weighing on assessments of current conditions, the proportion of consumers saying business conditions were bad increased from 20.9% to 24.0%, while the share of those saying that jobs were "plentiful" fell from 49.2% to 45.2%.

"Notably, concerns about inflation - which had been receding since July — picked up again, with both gas and food prices serving as main drivers," she added.

"Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers."

Commenting on the latest survey readings, Ian Shepherdson, chief economist at Pantheon Macroeconomics, explained how the present conditions index was mainly driven by the state of the labor market.

"This is consistent with our view that the pace of hiring slowed significantly in October; our preliminary forecast for private payrolls—based on the Homebase data—is just +50K.

Nevertheless, Shepherdson went on to add that: "But sentiment and spending are not the same thing [...] We continue to think real consumption will grow by a little over 2% annualized in the fourth quarter, up from 1% in the third quarter, despite depressed confidence."