The Reuters/University of Michigan consumer sentiment index for May rose to 77.8, up from 76.4 in April and the best index reading since January 2008. A MarketWatch poll of economists expected a reading of 76.
The fall in gasoline pump prices has surely had the most impact on the better reading, while consumers appear to discount the relatively weak reports on employment as a seasonal dip rather than a new downward trend. The rise in consumer sentiment is mirrored in today’s release of the producer price index, which fell -0.2% in April, led by a -1.4% drop in oil prices (more coverage here).
The good reports on inflation and consumer sentiment have pulled US equities out of the doldrums where they began the day. The DJIA is up 0.13%, the Nasdaq composite is up 0.64%, and the S&P 500 is up 0.16% after starting today’s trading session about -0.5% below yesterday’s close.