University of Michigan consumer sentiment nearly unchanged in early August

The University of Michigan index of consumer sentiment fell slightly to 92.9 in the preliminary August estimate, from 93.1 in the final July print. The current conditions index was nearly unchanged from July (107.1, previous: 107.2) and the expectations component ticked lower (83.8, previous: 84.1). Personal finances continued to improve in August, both on a current (121, previous: 116) and expected (123, previous: 122) basis. Offsetting this were modest declines in the year-ahead (114, previous: 115) and medium-term (99, previous: 101) economic outlook. Year-ahead inflation expectations were unchanged at 2.8% and 5-10 expectations slipped one-tenth to 2.7%.

Purchasing sentiment for durables was broadly unchanged this month. Indicators of major household purchases (157, previous: 161) and vehicle sales (143, previous: 145) declined a bit, but sentiment for home purchases (159, previous: 157) and sales (124, previous: 117) improved. The survey commentary noted that income gains were particularly strong among households, with incomes in the bottom third. Broad-based employment gains and wage increases were cited in survey responses as the cause, which were bolstered by continued declines in retail gasoline prices. Energy costs typically make up a greater share of lower-income household expenditures, which can makes sentiment at the bottom of the income spectrum more sensitive to these price changes.

"Overall, the data for August on consumer sentiment show no negative effect from concerns about foreign economic developments and financial market volatility. Steady sentiment should continue to support solid consumer spending growth in the US over the next few quarters", says Barclays.