Economic Snapshot: Consumer confidence dipped in May

Though the index is still quite high, this marks the second consecutive month the index has fallen.

Consumer confidence

The Consumer Confidence Index decreased slightly in May to a level of 117.9. The Present Situation Index increased from 140.3 to 140.7, while the Expectations Index declined from 105.4 to 102.6.

Consumers saying business conditions are “good” edged down from 30.8 percent to 29.4 percent, and those saying business conditions are “bad” was unchanged at 13.7 percent. Those stating jobs are “plentiful” declined from 30.3 percent to 29.9 percent; however, those claiming jobs are “hard to get” also decreased from 19.4 percent to 18.2 percent.

The percentage of consumers expecting business conditions to improve over the next six months decreased from 25.1 percent to 21.3 percent; however, those expecting business conditions to worsen also declined from 10.4 percent to 10.1 percent.

The proportion of consumers expecting more jobs in the months ahead declined from 21.9 percent to 18.6 percent; however, those anticipating fewer jobs also decreased from 13.8 percent to 12.0 percent. The percentage of consumers expecting their incomes to increase edged up from 18.7 percent to 19.2 percent; however, the proportion expecting a decrease also rose, from 7.6 percent to 8.7 percent.

ADP employment

Private sector employment increased by 253,000 jobs from April to May. This is up significantly from the 174,000 jobs added in April.

“Job growth is rip-roaring. The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force,” said Mark Zandi, chief economist of Moody’s Analytics. “Increasingly, businesses’ No. 1 challenge will be a shortage of labor.”

Medium and small businesses contributed heavily to the increase, adding 113,000 and 83,000 jobs, respectively. Large businesses added 57,000 jobs.

Service-producing employment added 205,000 jobs in May. Professional/business services added 88,000 jobs, which Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said is the strongest monthly increase since 2014. Trade/transportation/utilities added 58,000 jobs and financial activities added 7,000 jobs. Leisure/hospitality lost 11,000 jobs in May.

Goods-producing employment added 48,000 jobs in May. Construction added 37,000 jobs and manufacturing added 8,000 jobs.

GDP

Real gross domestic product increased at an annual rate of 1.2 percent in the first quarter of 2017, according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.1 percent.

The second estimate is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 0.7 percent.

With this second estimate for the first quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in personal consumption expenditures were larger and the decrease in state and local government spending was smaller than previously estimated. These revisions were partly offset by a larger decrease in private inventory investment.