U.S. consumer sentiment drops modestly in May, likely to drop further

The U.S. Conference Board’s index of consumer sentiment dropped more than anticipated in May. The consumer confidence index dropped to 117.9 in May, whereas April’s figure was downwardly revised to 119.4 from 120.3. Consensus expectations were for the index to drop more modestly to 119.5.

The present situation index remained widely the same at 140.7 in May, as compared with 140.3 in April. Meanwhile, the consumer expectations measure dropped to 102.6 from 105.4, mainly driving the drop in the headline figure. The labor market differential that gauges the net share of consumers that employment as plentiful was up to 11.7 from 10.9. This indicates towards continued strengthen in labor markets.

Meanwhile, consumer confidence has rebounded at a solid rate since the elections, and despite the latest drop, consumer sentiment is seen as remaining buoyant and close to post recession highs, noted Barclays in a research report.

The U.S. household sector is viewed as being on strong footing, while the first quarter weakness is expected to be transitory. However, sentiment data is expected to drop further from the current elevated level, added Barclays.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -42.3393. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex