Consumer sentiment continued its steady if somewhat confounding rise on Friday, June 25, as the Reuters/University of Michigan index posted a final reading of 76.0 compared to its early June reading of 75.5. The final reading is 7.3% higher than the 70.8 reading of June 2009.
The Reuters/University of Michigan index now stands at its highest point since January 2008.
“The slow rise in the Index of Consumer Sentiment during the past year has been due to how consumers view current conditions in the economy,” according to a news release from Reuters/University of Michigan. “The improvement was not because consumers now view the economy more favorably, but that any improvement, however small, was seen as a welcome development after the unprecedented economic recession.”
News heard about jobs has changed dramatically, for example.
“Reports of net job changes rose to the most favorable level in five years in June,” the release stated. “Despite the gains, consumers did not anticipate significant declines in unemployment in the year ahead. Rather, the majority of consumers expected unemployment to remain largely unchanged at current levels during the next twelve months.”
Along with the overall index, the survey also reported that consumers’ view of current conditions stood at a reading of 85.6, 16.9% higher than the June 2009 reading of 73.2. Expectations rose to 69.8, only 0.9% higher than the year-ago 69.2 level.
“The June survey indicated that consumers expect economic growth to slow, and as a result, anticipate that the unemployment rate will remain largely unchanged through the balance of the year,” wrote Surveys of Consumers chief economist Richard Curtin in an analyst note. “Weak financial prospects, including lackluster job and income growth as well as tight credit remain the primary constraint to a more robust spending outlook. Overall, confidence is strong enough to support the continued growth in consumption, although the pace of growth will slow into the start of 2011. The survey data indicate real spending growth will average 2.5% in 2010.”
Read a story about early June consumer sentiment from the archives of InvestmentAdvisor.com.