American consumers' attitudes toward the economy showed a slight improvement in June, largely due to declining gas prices, yet the overall sentiment remains pessimistic when viewed historically. The Conference Board's consumer confidence index rose by 0.6 points to 91.2 for the month, a figure that still lags behind the 95.2 reading from the previous year. This modest recovery follows a period of worsened consumer sentiment triggered by a conflict involving Iran that led to a surge in oil and gas prices, escalating inflation and diminishing the real value of Americans' incomes. Prior to the pandemic, the consumer confidence index consistently surpassed 120.
Employer hiring slowed considerably in June, with U.S. businesses adding only 57,000 jobs, less than half the number reported for the prior month. This deceleration signals a continued cautious outlook among companies regarding the economy's health. The Labor Department reported on Thursday that the unemployment rate edged down to 4.2% from 4.3% in May. However, this decline was primarily influenced by individuals who stopped searching for work and are no longer counted in the labor force statistics. The figures indicate that businesses are remaining hesitant due to persistent inflation, which is at a three-year high, and consumer confidence levels that are near their post-pandemic lows. Previously reported solid job gains for April and May were also revised downward.
Weekly applications for unemployment aid saw a small decrease last week, with layoffs remaining at historically low levels. The number of Americans filing for unemployment benefits for the week ending June 27 fell by 1,000 to 215,000, according to the Labor Department. This figure was lower than the 225,000 new applications anticipated by analysts. These weekly filings are often viewed as a real-time indicator of the job market's health and general layoff trends. The four-week moving average of jobless claims, designed to smooth out weekly fluctuations, also decreased by 2,500 to 222,000.
In the housing market, the average rate for a long-term U.S. mortgage declined this week to its lowest point since mid-May, offering some relief in borrowing costs for potential homebuyers. The benchmark 30-year fixed-rate mortgage fell to 6.43% from 6.49% the previous week, as reported by Freddie Mac. A year ago, the average rate stood at 6.67%. The average mortgage rate has largely fluctuated around 6.5% since late February, coinciding with the onset of the conflict between the U.S. and Iran, which disrupted crude oil shipments from the Persian Gulf. This disruption contributed to higher oil prices, subsequently influencing inflation, bond yields, and mortgage rates.
Despite the slowdown in hiring, U.S. job openings remained robust in May, standing at 7.6 million. This indicates that the American labor market continues to display resilience in the face of economic disruptions. Forecasters had predicted approximately 7 million job openings for May. While the market is described as sturdy, it is not experiencing booming growth. Layoffs saw an increase in May, and the number of individuals quitting their jobs, typically a sign of confidence in employment prospects, increased only marginally. Gross hiring, which measures the total number of jobs filled before accounting for separations, dipped to 5.17 million in May from 5.26 million in April. This figure is notably lower than the regularly exceeding 6 million gross monthly hires seen during the market's peak performance between mid-2021 and mid-2023 following COVID-19 lockdowns.