The final
reading for the May Reuters/Michigan index of consumer sentiment came in at 52.2
compared to the flash reading of 50.8 and the April final reading of 52.2. That
marked the end of four consecutive months of sharp deteriorations in sentiment.
Economists
had expected the indicator to be revised
marginally up to 51.0.
The details of
the latest Surveys of Consumers of the University of Michigan revealed that the
index of current economic conditions fell by 1.5 per cent m-o-m to 58.9 this
month (the lowest level since November 2022 (58.8)), while the index of
consumer expectations rose by 1.3 per cent m-o-m to 47.9.
The survey also
showed that the year-ahead inflation expectations increased from 6.5 per cent in April to 6.6 per cent in May,
compared
to the preliminary reading of 7.3 per cent. That was the smallest gain since
the election and marked the end of a four-month streak of extremely large jumps
in short-run expectations. Meanwhile, the 5-year
inflation expectations decreased from 4.4 per cent in April to 4.2
per cent, compared to the
preliminary reading of 4.6 per cent. That represented the first decline seen since December 2024 and
ended an unprecedented four-month sequence of advances.
Commenting on
the latest results, Joanne Hsu, Surveys of Consumers Director, noted that sentiment
had ebbed at the preliminary reading for May but turned a corner in the latter
half of the month following the temporary pause on some tariffs on China's goods.
“Expected business conditions improved after mid-month, likely a consequence of
the trade policy announcement,” she added. “However, these positive changes
were offset by declines in current personal finances stemming from stagnating
incomes throughout May. Overall, consumers see the outlook for the economy as
no worse than last month, but they remained quite worried about the future.”