US consumer sentiment index at six-month high in September

US consumer sentiment picked up more than expected in September, to a six-month high, according to a preliminary reading from the University of Michigan.

The consumer sentiment index rose to 100.8 from 96.2 in August and 95.1 in September last year, beating expectations for a reading of 96.6. This marked the second-highest level since 2004, only behind the March 2018 reading of 101.4.

The current economic conditions index pushed up to 116.1 from 110.3 in August and 111.7 in the same month a year ago.

Meanwhile, the index of consumer expectations increased to 91.1 this month from 87.1 in August and 84.4 in September 2017.

Surveys of Consumers chief economist Richard Curtin: "Importantly, the gains were widespread across all major socioeconomic subgroups. The expectations index reached its highest level since July 2004, largely due to more favourable prospects for jobs and incomes. Despite a lessening of expected gains in nominal incomes in September, inflation expectations also declined, acting to offset concerns about declining living standards.

"The largest problem cited on the economic horizon involved the anticipated negative impact from tariffs. Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months."

Michael Pearce, senior US economist at Capital Economics, said the rise in the consumer confidence index is mostly a reflection of just how strong labour market conditions are - jobless claims fell last week to their lowest level since 1919 - and suggests that spending growth will remain strong over the coming months.

"But with the boost to disposable incomes from the tax cuts set to fade next year, and the impact of higher interest rates building, we doubt that will be sustained well into 2019," he said.