Concerns over unemployment and uncertain economic outlook led to consumer confidence levels plunging to the lowest figure seen in the first half of the year.

The consumer index – a measurement of how domestic consumers felt about the labour market, business conditions and the following six months – fell from 54.3 last month to 50.4 points this month. Economists had expected the index to fall to 51.0 points in July. A slower growth in the second half of the year is expected following the survey results as a sustainable growth rate is heavily dependent on the rate of consumption.

The US economy is experiencing slow recovery rates after the global recession that started in December 2007. Consumers are increasingly pessimistic about future outlook of the economy due to the poor performance of the labour market and the credit crunch.   

However, analysts said that the drop in consumer confidence did not lead directly to waning consumption growth. Analysts expect personal spending figures to remain steady.

Oil prices fell following the fall in the consumer index.  The index is seen as a key indicator of future demand.

Crude prices for September delivery slipped by 0.8 per cent to US$76.88 (*S$104.81) a barrel

Crude oil inventories were expected to fall by 1.4 million barrels last week. However there was an increase of 600,000 barrels of gasoline stockpiles and 1.9 million barrels of distillates in storage, according to a survey by Dow Jones Newswires.

In actuality, crude oil inventories fell to a four-month low last week due to declining imports and impending weather disruptions.

*Exchange rate correct as at 28 July 2010