US consumer sentiment improves in March - Uni Michigan
Consumer sentiment in the US improved in March, according to a preliminary reading from the University of Michigan.
The consumer sentiment index rose to 97.8 this month from 93.8 in February, but was down from a reading of 101.4 last March.
Meanwhile, the current economic conditions index increased to 111.2 in March from 108.5 the month before, but came in below March 2017's reading of 121.2.
The index of consumer expectations printed at 89.2 this month from 84.4 in February and 88.8 in March last year.
Survey of Consumers chief economist Richard Curtin said the increase in the index was entirely due to households with incomes in the bottom two-thirds of the distribution, whose sentiment rose to 97.4 from 90.0 in February.
"Sentiment fell among households with incomes in the top third to 98.5 in early March from 101.7 in February. The difference that accounted for the divergence was how households evaluated their personal finances, as lower income households expressed much more positive assessments. The divergence was due to a monthly jump of one-percentage point in income expectations among middle and lower incomes compared to a change of just one-tenth of a percentage point among those with incomes in the top third. Rising income expectations were accompanied by lower expected year-ahead inflation rates, resulting in more favourable real income expectations.
"Moreover, all income groups voiced more positive prospects for growth in the overall economy during the year ahead. Since households with incomes in the top third account for more than half of all consumer expenditures, cautious observers will conclude that the latest data are another indication that the end of the expansion is on the distant horizon."
Capital Economics said the further rise in the University of Michigan consumer sentiment index in March adds to the signs that the fundamentals of consumption growth remain solid.
"We don’t think that will be enough to prevent consumption growth slowing this year, but it does suggest a more severe downturn is unlikely."