University of Michigan consumer sentiment slips in late October

The University of Michigan index of consumer sentiment unexpectedly fell to 90.0 in the final October reading, down from 92.1 in the mid-month estimate. The consensus had looked for a nearly unchanged reading of 92.5 on the headline index. The current conditions index fell to 102.3 (previous: 106.7), and the expectations component slipped to 82.1 (previous: 82.7). The downward revision in current conditions was due to a decline in purchasing sentiment for major household items; this index fell to 154 from 164 in the preliminary estimate.

The drop, however, brings the index back in line with its September print (151) and represents a reversal of the mid-month spike higher, as opposed to an outright decline in purchasing sentiment. The survey commentary suggests this decrease was due to "fewer price discounts than had been anticipated" at retailers. On the prices side of the survey, year-ahead inflation expectations were unchanged at 2.7%, while longer-term expectations fell one-tenth, to a 13-year low of 2.5%.

"We do not find the late-month dip in sentiment a concern and expect the recent strength in household consumption to prove durable", says Barclays.