US consumer sentiment improves in June

US consumer sentiment improved more than expected in June, according to a preliminary reading from the University of Michigan.

The Michigan sentiment index rose to 86.4 from 82.9 in May and 78.1 in June 2020. The current economic conditions index printed at 90.6 in June compared to 89.4 the month before and 87.1 in the same month a year ago.

The index of consumer expectations increased to 83.8 from 78.8 in May and 72.3 in June 2020.

Surveys of Consumers chief economist, Richard Curtin, said: "Consumer sentiment rose in early June, recouping two-thirds of May's loss. The early June gain was mainly among middle and upper income households and for future economic prospects rather than current conditions. Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment.

"Rising inflation remained a top concern of consumers, although the expected rate of inflation declined in early June. Spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974. These unfavourable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982. These declines were especially sharp among those with incomes in the top third, who account for more than half of the dollar volume of retail sales.

"Fortunately, in the emergence from the pandemic, consumers are temporarily less sensitive to prices due to pent-up demand and record savings as well as improved job and income prospects. The acceptance of price increases as due to the pandemic, makes inflationary psychology more likely to gain a foothold if the exit is lengthy."