US consumer sentiment improves more than expected in November

The University of Michigan’s preliminary consumer sentiment index rose to 91.6 in November from 87.2 the month before and 91.3 in the same month last year, beating expectations for a reading of 87.5.

Meanwhile, the index of current economic conditions rose to 105.9 from 103.2 in October and 104.3 in November 2015.

The index of consumer expectations pushed up to 82.5 from 76.8 in October, but was down from 82.9 in November 2015.

Surveys of Consumers chief economist Richard Curtin said: “The most striking finding in early November was that both near and long-term inflation expectations jumped to 2.7% from last month's record matching lows of 2.4%. These increases must be replicated before they can be taken to indicate a troublesome development; thus far, the data has simply repeated the March 2016 peaks.

“Nonetheless, it may be viewed as added justification for next month's expected interest rate hike. The expected small increase in interest rates had little impact on favourable buying attitudes, and still supports a 2.5% increase in real consumer spending during 2017. Unfortunately, the November data must be accompanied by the proviso that it was collected before the result of the Presidential election was known late Tuesday."

Capital Economics said: “The rise in the University of Michigan measure of consumer confidence in November suggests that last-minute worries about the presidential election had little impact on sentiment.

“The potential impact of the election result notwithstanding, today’s rise left the University of Michigan index consistent, on past form, with real consumption growth of around 4% annualised in the fourth quarter. That said, this index hasn’t been a very good guide to consumption growth recently, and we suspect that growth of closer to 2% is more realistic, especially if the election result ends up having a more adverse impact on confidence than the pre-election data suggest.”