U.S. University of Michigan’s preliminary consumer sentiment index rises in June

The preliminary estimate of the University of Michigan index of consumer confidence rose in the month of June to 99.3 from May’s 98. Barclays’ expectation was of a modest fall to 97.5. The rise was mainly because of a rebound in consumers’ assessment of current economic conditions. This sub-index rose 6.1 points to June.

Meanwhile, the consumer expectations index fell to its lowest level in 2018, in the midst of a less favourable economic outlook. There was a fall in the percentage of households who expect future incomes to exceed inflation, with more now expecting incomes to rise just enough to keep pace with inflation, stated Barclays in a research report.

The one-year ahead and long-term inflation expectations indices rose one tenth, to 2.9 percent and 2.6 percent, respectively. Overall, today’s report indicated that consumers perceive themselves to be better off financially compared to a year ago and believe it is a good time to spend on major household items. This augurs well for consumption spending in the second quarter. However, consumers also perceive more uncertainty, driven by expectations of higher interest rates and increased gas prices, noted Barclays.

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