The final
reading for the May Reuters/Michigan index of consumer sentiment came in at 69.1
compared to the flash reading of 67.4 and the April final reading of 77.2. Still,
this was the lowest reading in six months.
Economists
had predicted the indicator to be revised slightly up to 67.5.
The details of
the latest Surveys of Consumers of the University of Michigan revealed that the
index of current economic conditions plunged by 11.9 per cent m-o-m to 69.6
this month while the index of consumer expectations tumbled by 9.5 per cent
m-o-m to 68.8.
The report also
revealed that the year-ahead inflation expectations increased from 3.2 per cent in April to 3.3 per cent in May, compared
to the preliminary reading of 3.5 per cent. This represented the highest reading
since November 2023 (4.5 per cent). Meanwhile, the 5-year inflation expectations remained
unchanged at 3.0 per cent, compared to the preliminary estimates of 3.1%.
Commenting on
the latest results, Joanne Hsu, Surveys of Consumers Director, said an 8.1
index-point decrease in the headline index in May is statistically significant.
She also noted that the year-ahead outlook for business conditions saw a particularly
notable decline and consumers expressed particular concern over the labour
market. “The prospect of continued high interest rates also weighed down
consumer views,” Hsu added and cautioned that these deteriorating expectations
suggest that multiple factors pose a downside risk for consumer spending.