(Bloomberg) -- US consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market.
The preliminary October sentiment index declined to 68.9 from 70.1 in September, according to the University of Michigan. The median estimate in a Bloomberg survey of economists called for a reading of 71.
Consumers expect prices will climb 2.9% over the next year, up from the 2.7% expected in September and the first increase in five months, the report issued Friday showed. At the same time, they see costs rising 3% over the next five to 10 years, down from 3.1% in the prior month.
While the rate of inflation has cooled over the past year, households remain troubled by high prices that they also see outpacing their income gains in the year ahead. A measure of consumers’ perception of their current financial situation dropped to the lowest level since the end of 2022.
The share of consumers who expect unemployment to rise in the coming year fell to 31%, the lowest reading in 10 months.
“Despite strong labor markets, high prices and inflation remain at the top of consumers’ minds,” Joanne Hsu, director of the survey, said in a statement.
Separate figures Friday showed no change in a gauge of prices paid to producers in September, suggesting further progress toward tamer inflation.
Still, respondents welcomed the Federal Reserve’s decision last month to start lowering borrowing costs. Their views of buying conditions for durable goods such as cars and major appliances edged up to a four-month high.
Looking at homebuying conditions, concerns about high interest rates fell to the lowest in 15 months. But a majority still sees borrowing costs as too high, suggesting further easing is necessary for bolster sales, the report said.
The current conditions gauge slipped to 62.7 from 63.3. A measure of expectations fell to 72.9 this month from 74.4 in September.
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