Consumer sentiment in US increased less than forecast in May

[WASHINGTON] Consumer confidence in the US climbed less than forecast in May as Americans were a little less ebullient about the economy's prospects in the run up to the presidential election.

The University of Michigan's final index of sentiment rose to 94.7 from 89 in April. The median projection in a Bloomberg survey of 62 economists called for 95.4, with estimates ranging from 93 to 96.5. A preliminary reading earlier this month was 95.8.

Household purchasing power is getting a boost as more Americans than at any time in the last 10 years said they expect their finances to improve over the next 12 months. A pickup in consumer spending, the biggest part of the economy, is key to helping spur economic growth this quarter after a US slowdown earlier in the year.

"The late month falloff was due to a slightly less favorable outlook for the overall economy," Richard Curtin, director of the University of Michigan consumer survey, said in a statement.

Households' biggest uncertainty, said Mr Curtin, was "the outlook for future government economic policies under a new president. This has increased their emphasis on maintaining precautionary savings."

The current conditions index, which measures Americans' perception of their personal finances, climbed to 109.9, the highest since January 2007, from the prior month's 106.7.

The gauge of expectations six months from now rose to 84.9 from 77.6. The preliminary reading earlier this month was 87.5.

Respondents expected the inflation rate in the next year will be 2.4 per cent, the lowest since September 2010 and down from 2.8 per cent in the April survey. Over the next five to 10 years, they project a 2.5 per cent rate of price growth, the same as in April and matching the record lows in data going back almost five decades.

BLOOMBERG