U.S. consumer confidence index falls again in May

U.S. consumer confidence dropped for the second straight month, falling 0.8 points to 98 in May. However, it continues to be consistent with its average for this year and is well within the range it has maintained for the last 19 months. Given that consumer confidence has more or less stayed between 93.4 and 101.4 since the presidential election, it would possibly be a mistake to over interpret any small monthly moves in overall consumer sentiment, noted Wells Fargo in a research report.

All of May’s fall came from a drop in consumers’ perception of current economic conditions, which dropped 3.1 points to 111.8. The fall possibly hints at rising concerns regarding increasing gasoline prices. The proportion expectation gasoline prices to rise in the next 12 months jumped 15 points to 62. Consumers’ expectations for inflation over the coming year rose 0.1 point to 2.8 percent, which is the second time in the last three months it has stayed at this level and is the highest it has been since 2016. Longer-term inflation expectations continue to be anchored at 2.5 percent, which strengthens the point that heightened near-term inflationary pressures are seen as temporary.

Attitudes regarding economic conditions rebounded in May. Consumers’ assessment of business conditions rose 7 points year-on-year to 134. Meanwhile, consumers also expect that the jobless rate will stay close to where it is today, with the proportion expecting unemployment to remain on hold in the next 12 months rising 5 points to 51.

Plans to buy major household appliances dropped 5 points to 160, while plans to purchase a vehicle dropped 15 points to 128. The proportion stating that now is a good time to purchase a home dropped 2 points to 69, continuing its recent slide. The fall possibly reflects worries about higher prices and the lack of inventory of homes for sale, implying home sales would be hard pressed to break away from their recent range, stated Wells Fargo.

At 20:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 70.8942. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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