US consumer sentiment declined in June by less than initially estimated on expectations inflationary pressures will moderate.
The University of Michigan’s final June index eased less than a point to 68.2, according to figures released Friday. The preliminary June reading was 65.6. The median estimate in a Bloomberg survey of economists called for a final reading of 66.
Consumers expect prices will climb at an annual rate of 3% over the next year, down from the 3.3% expected in May and the lowest in three months. They see costs also rising 3% over the next five to 10 years.
The late-month improvement in sentiment reflected an increase in consumer expectations tied to a slightly more favorable outlook for the economy and prospects for lower interest rates. At the same time, many indicated lingering concerns about the impact of high prices on their finances.
Though the rate of inflation has cooled since peaking in 2022, elevated prices of essentials such as groceries have left Americans discouraged. Consumer sentiment remains well below pre-pandemic levels.
“In spite of the persistence of concerns over high prices since then, sentiment has improved considerably over the past two years,” Joanne Hsu, director of the survey, said in a statement. “At the same time, experiences with high prices are a key reason that sentiment remains below its historical average since 1978.”
There are also some signs that the labor market, which has driven consumer spending over the last year is gradually cooling. The unemployment rate rose 4% in May, the highest in more than two years and recurring applications for unemployment benefits are the highest since the end of 2021.
A measure of expectations increased to 69.6 this month from 68.8 in May. The current conditions gauge fell to 65.9 from 69.6.
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