A report from the University of Michigan revealed on Friday that the preliminary reading for the Reuters/Michigan index of consumer sentiment declined 12.7 per cent m-o-m to 67.4 in early May. Economists had expected the indicator would slip to 76.0 this month from the April final reading of 77.2.
According to the report, the index of current economic conditions plunged 12.9 per cent m-o-m to 68.8 in May, while the index of consumer expectations decreased 12.5 per cent m-o-m to 66.5.
The report also showed that the estimates of year-ahead expected inflation climbed from 3.2 per cent in April to 3.5 per cent early this month, the highest level since November 2023 (4.5 per cent). Meanwhile, the 5-year expected inflation rose from 3.0 per cent to 3.1 per cent, the highest level since November 2023 (3.2 per cent).
Commenting on the latest findings, Surveys of Consumers Director Joanne Hsu said that the consumer sentiment retreated about 13% this May following three consecutive months of very little change. "This 10 index-point decline is statistically significant and brings sentiment to its lowest reading in about six months. This month’s trend in sentiment is characterized by a broad consensus across consumers, with decreases across age, income, and education groups,” she added.