U.S. Consumer Sentiment Rises More Than Expected
A customer looks over the soda selection inside a Wal-Mart store in Kearny, New Jersey. Confidence among U.S. consumers rose in June to the highest level in more than two years, a private survey showed. Photographer: Daniel Acker/Bloomberg
Confidence among U.S. consumers rose in June to the highest level in more than two years, a private survey showed.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased to 75.5, the highest since January 2008, from 73.6 in May. The gauge was projected to rise to 74.5, according to the median forecast in a Bloomberg News survey of 65 economists.
The figure shows the slump in stock prices sparked by Europe’s debt crisis is having limited effect on sentiment. Retail sales unexpectedly fell in May, according to another report today, indicating the gains in confidence will have trouble fueling purchases without stronger job growth.
“Confidence is heading in the right direction but we still have a long way to go to reach normal levels,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “It’s a pretty encouraging development that consumer confidence hasn’t shown much damage from all the negative news out there.”
Sales at U.S. retailers fell 1.2 percent in May, the most since September 2009, the Commerce Department said earlier today. Retail purchases were projected to increase 0.2 percent, according to the median estimate of 76 economists in a Bloomberg survey.
Estimates for the Thomson Reuters/University of Michigan measure ranged from 69.8 to 77.4, according to the Bloomberg survey.
Stocks fell after the reports. The Standard & Poor’s 500 Index rose declined than 0.5 percent to 1,080.92 at 11:45 a.m. in New York. Treasury securities rose, with the yield on the 10- year note dropping to 3.25 percent from 3.32 percent late yesterday.
Current Conditions
The gauge of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items such as cars, rose to 82.9 in June, the highest since March 2008, from 81 in May.
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, increased to 70.7, the highest since September, from 68.8.
Consumers in the survey said they expect an inflation rate of 2.8 percent over the next 12 months, compared with 3.2 percent in May.
Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 2.7 percent rate of inflation, compared with 2.9 percent the prior month.
Depend on Jobs
Gains in confidence and spending in coming months depend on a sustained recovery in the job market. Private payrolls rose by 41,000 in May, fewer than forecast, while overall employment climbed to 431,000, boosted by government hiring of temporary workers for the census, Labor Department figures showed last week. The jobless rate fell to 9.7 percent as discouraged workers left the labor force.
A Bloomberg survey taken this month showed the unemployment rate will end the year at 9.5 percent and average 9.1 percent next year, according to the median estimate.
Stocks have fallen on concern the global economic rebound may falter as European governments struggle with swelling budget deficits. The Standard & Poor’s 500 Index has dropped 11 percent from a 19-month high on April 23 through yesterday.
One source of relief for households is lower fuel prices. The cost of regular unleaded gasoline is down 7.4 percent since a 2010 peak reached on May 5, according to AAA, and declined to $2.71 a gallon at the pump yesterday.
Shoppers are seeking more discounts, benefiting companies that offer cheaper merchandise. Discounters Target Corp., Ross Stores Inc. and TJX Cos., the owner of the T.J. Maxx clothing chain, reported an increase in May sales at stores open at least a year compared with the same month in 2009. Sales also climbed at Costco Wholesale Corp., the largest U.S. warehouse club.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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