U.S. consumer sentiment slipped unexpectedly in July, a report showed Friday, as consumers’ view of their current conditions and expectations declined modestly against a backdrop of rising energy prices.
The University of Michigan’s preliminary reading on consumer sentiment in July was 83.0, down from June’s final 84.9, said sources who saw the subscription-only report.
The median forecast of Wall Street economists polled by Reuters was for a reading of 85.5.
“It’s a little weaker than expected, in the context that rising oil prices and geopolitical risk as well as the recent price correction in the equity market have served to dent the confidence of the consumer,” said George Davis, senior currency strategist with RBC Capital Markets in Toronto.
Treasuries recovered earlier price losses, with the benchmark 10-year note trading unchanged in price from late Thursday for a yield of 5.07 percent.
The dollar popped up to session highs despite the softer-than-expected confidence data. U.S. stocks extended their losses.
The university survey’s index of current conditions slipped to 100.8 in July from 105.0 in June, while consumer expectations declined to 71.6 from 72.0 in June.
Consumer spending accounts for about two-thirds of U.S. economic activity, but in recent years confidence measures have been a weak guide to actual spending.
Consumers’ expectations in July were for more muted inflation ahead, the report said, according to the sources.
The University of Michigan’s preliminary July reading on one-year U.S. inflation expectations was 3.1 percent, down from 3.3 percent in June.
Median expectations for inflation over a five-year horizon edged down to 2.8 percent in July from 2.9 percent in June.