WASHINGTON — Consumer confidence declined in February for the first time in seven months as gasoline prices started to rise from a six-year low and tempered Americans’ optimism about the economy.
The University of Michigan preliminary sentiment index decreased to 93.6 from a final January reading of 98.1 that was the highest since the start of 2004. The median projection in a Bloomberg survey of economists called for no change from the previous month.
“I don’t think this is the beginning of a downtrend,” said Thomas Costerg, an economist at Standard Chartered Bank in New York. “We still have some strong supports for confidence, with the stock market heading to new highs, the job market doing well and gasoline prices still low.”
Expanding headcounts are keeping Americans upbeat, while the drop in fuel costs since mid-2014 continues to generate more disposable income. In the February survey, the biggest share of consumers since 2007 said they expected their finances to improve in the coming year, which will probably help boost retail sales after two straight monthly declines.
Part of the reason sentiment pulled back this month was energy workers’ concerns about possible job losses as companies pare production. Residents coping with harsh winter weather in the Northeast and Midwest were less upbeat.
“We did get people who were employed by oil-related industries talk about a fall in production, and they were mainly concerned about the job implications of that,” Richard Curtin, director of the Michigan Survey of Consumers, said.
Estimates of the 69 economists in the Bloomberg survey for the sentiment measure ranged from 96 to 100.
The eurozone economy strengthened at the end of last year, with Germany reasserting itself. Gross domestic product advanced 0.3 percent in the fourth quarter after expanding 0.2 percent in the previous three months, the European Union’s statistics office in Luxembourg said Friday.
The Michigan index of expectations six months from now decreased to 87.5 from a reading of 91 last month, which was the highest since July 2004.
The gauge of current conditions, which measures Americans’ views of their personal finances, fell to 103.1 in early February from 109.3 a month earlier, which was the highest since January 2007.
Inflation expected
Households in the survey adjusted their price expectations up as they started paying more at the pump. Americans expected an inflation rate of 2.8 percent in the next year, up from 2.5 percent in January. The average cost of a gallon of gasoline was $2.24 as of Thursday. The price has edged up from an almost six-year low of $2.03 on Jan. 25, according to AAA.
“We’ve gotten a transitory boost in sentiment from declining energy prices,” said Michael Gapen, chief U.S. economist at Barclays Plc in New York. “It’s still higher than any other time since January 2007.”
Household spending jumped an annualized 4.3 percent in the fourth quarter, the most since the first three months of 2006, after a 3.2 percent pace from July through September. Consumption is projected to grow at a 3 percent annualized rate this quarter, according to the median estimate of 81 economists in a Bloomberg survey conducted from Jan. 9 to Jan. 14.
Retail sales dropped 0.8 percent in January after a 0.9 percent retreat a month earlier, the Commerce Department said Thursday.
The Michigan reading corroborates another measure of sentiment. The Bloomberg Consumer Comfort Index retreated to a five-week low of 44.3 in the period ended Sunday as households’ perception of their finances and the economy waned.
Progress in the labor market has underpinned sentiment. Job gains in January capped the strongest three months of payroll growth in 17 years.
Employers added 257,000 last month following advances the previous two months that were bigger than previously reported. The national jobless rate increased to 5.7 percent in January from 5.6 percent.
Wages might pick up. Average hourly earnings advanced 2.2 percent in January from the same month in 2014, just above the 2 percent average since the recession ended in June 2009.
