U.S. consumer confidence dropped in September after hitting the highest level in nearly seven years in August.
The Conference Board reported Tuesday that its confidence index fell to 86.0, the lowest point since a May reading of 82.2. It was the first decline after four months of gains and followed a revised 93.4 in August, which had been the highest reading since October 2007, two months before the Great Recession officially began.
Conference Board economist Lynn Franco said the decline reflected a less bullish view of the current job market, likely reflecting a softening in growth following the economic rebound that occurred in the spring.
Both the gauge that tracks consumers' feelings about current conditions and the reading of future expectations fell in September.
"Consumers were less confident about the short-term outlook for the economy and labor market and somewhat mixed regarding their future earnings potential," Franco said.
The September decline stood in contrast to a separate consumer sentiment survey released last week by the University of Michigan. Its index climbed in September to the highest level since July 2013.
"The Conference Board’s Consumer Confidence Index heated up during the summer months, but this report indicates that confidence cooled down in September," said Chris Christopher, an economist with IHS Global Insight, via e-mailed analysis. "However, a larger percentage of consumers expect their personal income to be stronger six-months hence. In August, consumer confidence was standing at the highest level since October 2007, light vehicle sales went through the roof, and back-to-school retail sales were better than expected. Consumer confidence came back to earth in September but still remains at elevated levels."
"Intentions of buying major appliances within six months (refrigerators, washing machines, vacuum cleaners, ranges, clothes dryers, and the like) surged ahead in September, while intentions of buying a new automobile fell back to the lowest levels since May," he continued. "So, consumers may be focusing on other big ticket durable items after the August auto splurge. Looking ahead, we expect consumer confidence to make up some of the September loss, adding some extra boost to discretionary spending in time for the holiday retail shopping season."
The fall in the Conference Board gauge of confidence was the biggest monthly drop since October 2013 when consumers were rattled by the 16-day partial federal government shutdown.
Paul Dales, senior U.S. economist at Capital Economics, said that the decline was likely just a temporary blip.
"With gasoline prices falling and the labor market still strengthening, we expect confidence will edge back before long," Dales said.