Consumer Sentiment Ended June Near a Six-Year High

Consumer sentiment improved, ending this month close to a six-year high set in May, as optimism among higher-income families rose to its strongest level in six years, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s final reading on the overall index on Americans’ consumer sentiment was 84.1 points, slightly below the 84.5 in May. The new figure was higher than the preliminary reading of 82.7.

Economists polled by Reuters had forecast the final June reading of 82.8.

“Consumers believe the recovery has achieved an upward momentum that will not be easily reversed,” Richard Curtin, survey director, said in a statement.

He added that the recent drop in stock prices and the jump in mortgage rates had not caused a deterioration in consumers’ view on the economy.

“To be sure, few high- or low-income consumers expect the economy to post robust gains or think the unemployment rate will drastically shrink during the year ahead,” Mr. Curtin said.

Consumer sentiment is considered by some economists as a predictor on consumer spending, which accounts for 70 percent of the United States economy.

Also on Friday, the Institute for Supply Management-Chicago said its index on Midwest business activity posted a steeper-than-expected drop in June to 51.6. A reading below 50 points suggests business contraction.

“It’s not firmly in expansion territory where businesses are ready to hire and invest,” said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, N.C.

In the Thomson Reuters/University of Michigan’s data, there was a divergence in outlook between higher-income families and lower-income ones.

Higher-income households showed increased optimism about their incomes and wealth, while lower-income ones reported less optimism. Families in the top third of incomes were the most optimistic since the June 2007 survey.

Article source: http://www.nytimes.com/2013/06/29/business/economy/consumer-sentiment-ended-june-near-a-six-year-high.html?partner=rss&emc=rss