Consumer confidence dips to new low: analyst
NEW YORK (Reuters) - Consumer confidence fell sharply this month, touching its weakest level in over a year and signaling that recent volatility in financial markets has curbed the enthusiasm of higher-income shoppers, according to data released on Wednesday by Consumer Edge Research.
The Interim Consumer Economic Index devised by the independent equity research firm based in Stamford, Connecticut was at 46.9 in mid-August, down 8.5 points from July's full-month reading of 55.4.
Consumer Edge analyst Bill Pecoriello said that when his team assesses the full-month result at the end of the month, their eyes will be on upper-income consumers and how they feel following the recent drags on their stock portfolios.
"Given the steepness of the drop, it's highly likely that the high-end consumer is weakening," Pecoriello told Reuters.
He said the interim index was a very strong indicator of the full-month result and that if it comes in at a similar range, it would be the lowest level since the firm started calculating the index in March 2010.
The July findings of Consumer Edge's economic index found that sentiment among high-income consumers fell to 60 in July, from 90 in February, mostly due to "a plummeting future outlook" among that group.
Any pullback at the high end will have a bigger impact on luxury names -- from Polo Ralph Lauren Corp and Coach Inc to Saks Inc and Nordstrom Inc -- than on mid-tier brands or consumer staples, which have already been under pressure for some time, Pecoriello said.
"We've seen the household and food sectors under pressure because 85 percent of households have been under pressure," Pecoriello said, referring to lower- and middle-income consumers. "The key thing is going to be now obviously, if we start to see the high end weaken, that could begin to hit some" of the luxury brands and retailers.
Upscale clothing maker Polo reported sharply higher quarterly profit on Wednesday on strong sales and raised its full-year revenue growth target.
Consumer Edge Research surveys at least 2500 US consumers online during the first 18 to 23 days of the month.
(Reporting by Martinne Geller)