Consumer sentiment rose more than expected in June, while expectations for future inflation subsided, a report showed on Friday.
The University of Michigan’s final reading on consumer sentiment rose to 84.9 in June, up from May’s final reading of 79.1, said sources who saw the subscription-only report.
The median forecast of Wall Street economists polled by Reuters was for a reading of 82.5.
Consumers’ more upbeat view of both their current and future conditions fueled the overall improvement in their mood, the report said. The survey’s index of current conditions rose to 105.0 in June from 96.1 in May, while consumer expectations rose to 72.0 from 68.2 in May.
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.
Neither stocks nor the bond market reacted to the data.
Notable, also, was that consumers’ median estimates of future inflation subsided in June.
The University of Michigan’s final June reading on one-year U.S. inflation expectations was 3.3 percent, versus 4.0 percent in May. Median expectations for inflation over a five-year horizon eased to 2.9 percent from 3.2 percent in May.
“Lower inflation expectations in June was another positive development,” said Patrick Fearon, senior economist at A.G. Edwards and Sons in St. Louis, Missouri. “That’s the kind of thing the Fed wants to see right now. Because the Federal Reserve has been in the news so much, people might have focused on the message that the Fed was fighting inflation.”