You are here
Consumer sentiment in US eased in March to a five-month low
[WASHINGTON] Consumer confidence eased in the first half of March as lower-income Americans grew more concerned about prospects for the US economy and higher gasoline prices.
The University of Michigan's preliminary sentiment index fell to a five-month low of 90 from to 91.7 in February. The median projection in a Bloomberg survey of economists called for 92.2. The group's measures of year-ahead and longer-term inflation expectations picked up.
All of the decline in confidence was among households at the bottom end of the income scale as prices at the gas pump marched higher. At the same time, the report showed robust labour market conditions are underpinning Americans' expectations that pay gains will follow suit.
"If you look at the inflation data, it's been up quite a bit over the last couple of months," Jacob Oubina, a U.S. economist at RBC Capital Markets LLC in New York, said before the report. "Consumers are noticing that and are wary of that as well." Estimates for consumer sentiment from 65 economists in the Bloomberg survey ranged from 90 to 94.
The Michigan report corroborates the weekly Bloomberg Consumer Comfort Index which has held in a narrow range the entire year. The report's monthly gauge of expectations about the economy also eased in March to a five-month low.
The Michigan measure of current conditions, which takes stock of Americans' view of their personal finances, dropped this month to 105.6, the lowest since November, from 106.8 in February.
The gauge of expectations for the next six months decreased to 80, the weakest in six months, from 81.9 in February.
Households expected the inflation rate over the next year will be 2.7 per cent, up from 2.5 per cent in the first two months of the year. Over the next five to 10 years, consumers projected prices would climb 2.7 per cent, up from 2.5 per cent last month, which matched the lowest level since the late-1970s.
"While rising gas price expectations remained strong in early March, this had no impact on consumers' real income expectations as job and income prospects remained strong," Richard Curtin, director of the Michigan Survey of Consumers, said in a statement.
Respondents expect an almost $1 increase in a gallon of gasoline in the next five years, almost twice as high as in January. Prices at the pump advanced to $1.96 a gallon in mid- March from a seven-year low of $1.70 in February, according to the motoring group AAA.
Recent reports have shown that price pressures are starting to stir. A core measure of consumer prices, which strips out food and fuel, rose 2.3 per cent from February 2015, the most since May 2012, data from the Labour Department showed Wednesday.
Buying conditions declined slightly this month, the Michigan report showed. Favourable mentions of low prices for big-ticket items fell, with those for vehicles dropping to the lowest level in 15 years.
The Michigan data also showed that 39 per cent of households reported that their incomes had recently increased. With inflation low, the fewest consumers since 2008 anticipated price-adjusted income declines in the year ahead.
A healthy labour market has been a catalyst underpinning sentiment. Employers added 242,000 workers in February and the jobless rate held at an eight-year low of 4.9 per cent. A report Thursday showed job openings were the third-highest since records began in 2000.
At the same time, hourly earnings increased 2.2 per cent in February from the same time a year earlier, in line with the 2.1 per cent average since the expansion began in mid-2009.