U.S. consumer sentiment continues to be strong in May

The U.S. Conference Board’s index of consumer sentiment rose in May to 128 from April’s downwardly revised 125.6. The reading was widely in line with consensus expectations. The rebound was mainly driven by the present situation index, while the expectations index rose modestly. Consumer sentiment has continued to be resilient in recent months in spite of uncertainty stoked by anti-trade rhetoric and stock market volatility. Moreover, consumers are expected to start adjusting to higher after-tax incomes and their perception of future economic conditions remains favourable, noted Barclays. Overall, this augurs well for consumption and GDP growth for the remainder of 2018.

The present situation index rebounded to 161.7, rising 4.2 points. There were fewer consumers who saw business conditions as being ‘bad’ and more who saw conditions as ‘good’. Consumers’ assessment of labor markets was mixed: the share of consumers who saw employment as ‘plentiful’, rose in May, but the share of those who viewed jobs as ‘hard to get’ also increased. The more forward-looking expectations index rose to 105.6, rising 1.3 points. This was driven by a rise in consumers’ expectations of ‘more jobs’ in the next six months. Meanwhile, consumers’ intentions of purchasing big-ticket items such as automobiles, homes and major appliances in the next six months declined, albeit only modestly, stated Barclays.

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