U.S. consumer sentiment rebounds slightly in July

Consumer sentiment in the U.S. rebounded slightly in July. The Conference Board’s index of consumer sentiment rose to 127.4 in the month from an upwardly revised 127.1 in the prior month. The outturn was better than anticipation of a moderation in the index and was mainly driven by a rise in the present situation index. However, the expectations index fell for the second consecutive month.

This implies that while consumers continue to be optimistic about the current conditions, their sentiment in future economic conditions has eroded over the last two months, noted Barclays in a research report. This could be linked to the uncertainty stoked by anti-trade policies. The University of Michigan consumer confidence survey contained evidence of this, suggesting that consumers have become increasingly concerned about the effects of tariffs.

The present situation index rose to 165.9 in July from 161.7. More consumers saw business conditions as being ‘good’ and fewer viewed conditions as ‘bad’. The assessment of current labor market conditions was also favorable, as more saw employment as ‘plentiful’. About the short-term outlook, the expectations index fell to 101.7 and details show that consumers’ assessment of the future is more mixed, stated Barclays.

The percentage of consumers expecting ‘more jobs’ in the next six months rose, even as those who expect ‘fewer jobs’ rose. Overall, fewer consumers now expect income, business conditions, and the employment situation to stay ‘normal’ or unchanged in the months ahead.

“This only points to increased uncertainty in consumers’ perceptions of the near-term economic outlook. Consistent with this, fewer consumers reported plans to buy a house or major appliances in the coming months”, said Barclays.

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