U.S. consumer confidence unexpectedly slumped in July, the Conference Board reported Tuesday. But at least one economist says the numbers should be taken “with a grain of salt.”

The board’s consumer confidence index reading came in at 76.6, down from 83.5 in June. Economists had been expecting the reading to rise to 84.7.

Sentiments among U.S. consumers have not been this low since the 61.4 reading recorded in March of this year.

“The rising level of unemployment and sentiment that a turnaround in labor market conditions is not around the corner have contributed to deflating consumers’ spirits this month,” Lynn Franco, director of The Conference Board’s Consumer Research Center, said.

“Expectations are likely to remain weak until the job market becomes more favorable,” Franco said.

The Conference Board said consumers’ expectations for the next six months were less optimistic than last month. Those anticipating an improvement in business conditions fell to 20.2% from 23.5%. Consumers anticipating conditions to worsen rose to 11.5% from 9.2%.

RBC Financial Group economist Ivana Rupcic said
despite obvious weakness in today’s numbers, “they should nonetheless be taken in with a grain of salt.

“The Conference Board survey is among the more volatile of the confidence surveys in the U.S. The University of Michigan consumer sentiment survey, a less volatile indicator, has remained relatively steady in July and has even seen some increases in both the headline index and the present situation component. “

Rupcic also noted that recent tax cuts and tax rebate cheques to be mailed out in the coming weeks will probably provide a boost to consumer sentiment, at least until an improvement is seen on the economic front. “To gauge the prospects for such an improvement, markets will likely shift their focus away from today’s confidence numbers and more toward the more important numbers to be released later on this week.”

The news hit U.S. markets hard. The Dow Jones industrial average fell 27.18 points in early morning trading, while the broader Standard & Poor’s 500 Index was off 2.8 points following the board’s announcement.

BMO Nesbitt Burns chief economist Sherry Cooper said in a report the “jobs hard to get” component may be the key result. “This measure of job performance, which had improved marginally in June, backtracked completely in July.”

“The Fed is still in play,” she said. “Tolerance for sub-par growth in the second half of the year is zero at the Fed, and we will not see strong growth without consumers spending their tax rebates promptly.”