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Consumer sentiment lowest since December

WASHINGTON (MarketWatch) -- Consumer sentiment is the lowest since December, with job concerns hitting results, according to data released Friday by the University of Michigan and Thomson Reuters.

The consumer-sentiment index fell to a preliminary July reading of 72 from 73.2 in June. Economists polled by MarketWatch had expected a July reading of 73. See economic calendar.

A tough employment market is taking a toll on consumers. Last week the U.S. Department of Labor reported that the economy gained only 80,000 jobs in June. Read more about jobs.

The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the most recent recession. Economists watch sentiment data to get a feel for the direction of consumer spending. In addition to weak labor-market conditions, analysts say consumers are also concerned about financial problems in Europe and U.S. fiscal uncertainty.

"Things could be a lot worse," said Paul Ashworth, chief U.S, Economist at Capital Economics, who noted that the sentiment index dropped to the mid-50s almost a year ago.

"Overall, consumers remain cautious, but at least they aren't panicking," Ashworth said.

While the sentiment index isn't experiencing a plunge like the one last summer, it remains relatively low, said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

"The lack of a rebound, despite some help from lower gasoline prices and a modest bounce in equities in the past month, raises the specter of growth remaining stuck at a low level for a while," O'Sullivan said.

According to the UMich report, a barometer of consumers' expectations declined to 64.8 in July from 67.8 in June. Meanwhile, a gauge of their views on current conditions increased to 83.2 from 81.5. Also, one-year inflation expectations declined to 2.8% from 3.1%.

Elsewhere Friday, the U.S. Department of Labor reported that U.S. wholesale prices rose in June on higher costs for food, trucks and other items. Read more about wholesale prices.