Consumer confidence rose more than expected in May.
The preliminary reading of the University of Michigan’s consumer sentiment index jumped to 94.6.
Economists had forecast that the index rose to 91.2 in June from 90.7 last month.
This marked the first time in three months that the index rose.
In the release, chief economist Richard Curtin wrote:
“The June gain was due to the most favourable personal financial prospects since 2007, with households expecting the largest wage gains since 2008.“
“Just as importantly, consumers expected the inflation rate to remain low over the foreseeable future. The expectation of rising interest rates has caused consumers to view current rates as attractively low, but it has not yet prompted the belief that it would be better to borrow-in-advance of future increases.”
In a client note following the report, Capital Economics’ Paul Ashworth wrote that the rebound in the index “was impressive given the surge in gasoline prices over the past few weeks. Other measures of confidence had weakened recently. Presumably improving labour market conditions outweighed the impact of higher energy prices and rising long-term interest rates.”