Consumer Confidence Hits 4-Year High in May
U.S. consumer sentiment rose to its highest level in more than four years in early May as Americans remained upbeat about the job market, a survey released on Friday showed.
Reuters reported that separate data earlier in the day showed U.S. producer prices unexpectedly fell in April as energy costs dropped by the most in six months, a sign of easing inflation pressures that could give the Federal Reserve more room to help the economy should growth weaken.
The Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment improved to 77.8 from 76.4 in April, topping forecasts for a small decline to 76.2.
It was the highest level since January 2008.
Despite the recent slowdown in job growth, nearly twice as many consumers reported hearing about new job gains than said they had heard about recent job losses, the survey said.
Even so, consumers were only slightly more optimistic about declines in the unemployment rate than they were a year ago, with only one in four expecting it to fall in the year ahead.
However, economists polled by the Philadelphia Federal Reserve, expect the U.S. unemployment rate to average 8.1% this year, and to fall to 7.7% next year.
Employers cut back on hiring in April and March after an acceleration at the start of the year. April’s unemployment rate eased to 8.1% as more people dropped out of the work force.
In a potential harbinger of increased spending, consumers’ buying plans for vehicles and durable goods improved at the beginning of the month, with 65% saying buying conditions were favorable, the highest level in more than a year.
“Households are feeling more comfortable. It’s pretty good news for consumer spending,” said Gus Faucher, senior macroeconomist at PNC Financial Services in Pittsburgh.