(Bloomberg) — Consumer confidence unexpectedly fell in May by the most in more than two years as Americans’ views on the economy dimmed.
The University of Michigan preliminary index of sentiment dropped to 88.6, the lowest since October, from 95.9 in April. The 7.3 point decrease was the largest since December 2012. The outcome was lower than the lowest estimate of 68 economists surveyed by Bloomberg.
News that the world’s largest economy stalled last quarter shook Americans’ outlook, while the tick up in fuel costs since early March also contributed to the gloomier perceptions. While slightly lower than in the prior month, households still held relatively upbeat views on incomes, a sign spending will be sustained.
“The decline was widespread among all age and income subgroups as well as across all regions of the country,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. “To be sure, the recent decline in consumer confidence does not indicate an incipient downturn in consumption and residential investment. Rather the data indicate a reluctant acceptance on the part of consumers that economic growth will remain near the same lackluster pace recorded during the past several years.”
The median projection in the Bloomberg survey of economists called for an unchanged reading at 95.9. Estimates ranged from 91.4 to 97.5. The gauge averaged 88.8 for the five years leading to the last recession that started in December 2007. The average for 2014 was 84.1.
The index has shown bigger declines than in May in only 20 months since the monthly surveys began in 1978.
Another report showed factory production stalled in April as American manufacturers were dealt blows by a strong dollar and cheap oil. The unchanged reading in output followed a 0.3 percent March gain, according to data from the Federal Reserve. Total industrial production declined for a fifth consecutive month as mining companies and utilities cut back.
Stocks fluctuated near all-time highs after the reports. The Standard & Poor’s 500 Index fell 0.1 percent to 2,118.25 at 10:38 a.m. in New York.
The sentiment survey’s current conditions index, which takes stock of Americans’ view of their personal finances, fell to 99.8 from the prior month’s 107.
The measure of expectations six months from now decreased to 81.5 from 88.8.