A report from
the University of Michigan revealed on Friday that the preliminary reading for
the Reuters/Michigan index of consumer sentiment decreased 2.7 per cent m-o-m
to 50.8 in early May. This marked the fifth straight drop in the index, which
brought it to the
lowest level since June
2022 (50.0).
Economists had anticipated
the indicator would increase to 53.4
this month from the April
final reading of 52.2.
According to
the report, the index of current economic conditions fell 3.7 per cent m-o-m to 57.6 in May (the lowest level
since June 2022), while the index of consumer expectations dropped 1.7 per
cent m-o-m to 46.5 (the lowest level since 1980).
The report also
showed that the estimates of year-ahead expected inflation jumped from 6.5 per
cent in April to 7.3 per cent early
this month, the highest reading since November 1981.
At the same time, the 5-year expected inflation climbed
from 4.4 per cent to 4.6
per cent, the highest level since March 1991.
Commenting on
the latest survey, Surveys of Consumers
Director Joanne Hsu noted that uncertainty over trade policy continued to
dominate consumers’ thinking about the economy in the period, when the interviews
for this release were conducted between April 22 and May 13, closing two days
after the announcement of a pause on some tariffs on imports from China. “Many
survey measures showed some signs of improvement following the temporary
reduction of China tariffs, but these initial upticks were too small to alter
the overall picture – consumers continue to express somber views about the
economy,” she added. “The initial reaction so far echoes the very minor
increase in sentiment seen after the April 9 partial pause on tariffs, despite
which sentiment continued its downward trend.”