Uni Michigan sentiment dips in September on hurricane woes

US consumer sentiment dipped a little in September amid worries about the impact of hurricanes Harvey and Irma, according to a preliminary reading from the University of Michigan.

The consumer sentiment index fell to 95.3 from 96.8 in August, but was ahead of expectations for a reading of 95.1 and higher than September 2016's 91.2.

Meanwhile, the current economic conditions index rose to 113.9 from 110.9 in August and 104.2 in September last year.

Finally, the index of consumer expectations declined to 83.4 in September from 87.7 the month before, but was up from 82.7 in September 2016.

Surveys of Consumers chief economist Richard Curtin said: "The two hurricanes had a greater impact on expected economic conditions. Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy. Among those who mentioned the hurricanes, the sentiment index was 80.2, while among those who did not spontaneously mention either hurricane, the sentiment index remained unchanged from last month at 96.8.

"Given the widespread devastation in Texas and Florida, it is not surprising to find these very negative initial reactions, nor would it be surprising if these negative assessments last longer than following most past hurricanes. While consumers anticipated slight increases in gas prices and a slightly higher overall inflation rate, those concerns were neutralized by the best assessments of their financial situation in more than a decade. Renewed gains in incomes as well as rising home and equity values have acted to counterbalance the negative impacts from the hurricanes. Given the current resilience of consumers, recent events are unlikely to derail confidence."

Paul Ashworth, chief US economist at Capital Economics, said the hurricanes had only a limited impact on sentiment.

"That said, the report suggests that too few interviews were conducted after Harvey/Irma to fully assess its impact on confidence, so there’s a possibility that the revised September reading will be lower as it will include some of those later responses. Only 9% of respondents mentioned the hurricanes as likely to have a negative impact on the economy, but among those people that did note the storms, confidence was markedly lower."