By Xavier Fontdegloria
Consumer sentiment in the U.S. rose in early June, reversing part of the fall registered in May, amid an improvement of the short-term outlook and easing inflation expectations.
The preliminary estimate of the index of consumer sentiment released Friday by the University of Michigan came in at 86.4 in June, up from 82.9 in May. The reading is above expectations from economists polled by The Wall Street Journal, who forecast the indicator to increase to 84.4.
The early June gain was mainly among middle and upper income households and for future economic prospects rather than current conditions, said Richard Curtin, the survey's chief economist.
Rising inflation remained a top concern of consumers, although the expected rate of inflation declined in early June, he said.
Americans' expected inflation rate eased somewhat in June. For the next year, consumers expect prices to increase 4% compared with a 4.6% in May. For the next five years, inflation is expected to rise by 2.8%, down from 3% the prior month.
June's rise in consumer sentiment slightly offsets the losses registered in May, when soaring inflation expectations dented consumers' mood. The indicator is far from February's 2020's pre-pandemic level of 101.0, but the reading should improve as job growth accelerates, economists say.
Consumers' assessment of the current economic conditions increased slightly to 90.6 in June from 89.4 in May. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next six months--rose to 83.8 from 78.8 the previous month.
Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment, Mr. Curtin said.
Despite the decline in inflation expectations, spontaneous references to market prices for homes, vehicles and household durables fell to their worst level since the all-time record in November 1974, he said.
The survey was conducted between May 26 and June 9. The final reading for the month will be published on June 25.
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(END) Dow Jones Newswires