The Reuters/University of Michigan consumer survey for May is out and the index of consumer sentiment rose to 79.3, up from 76.4 in April and 74.3 in May 2011. Economists had been expecting a reading of 77.8.
Surprisingly, given recent tepid reports on job growth, consumers continue to expect steady, if slow, job increases. From the announcement:
In each of the past three months, a majority of consumers reported an improved economy, and twice as many expected further improvement rather than renewed declines in the year ahead. Most consumers, however, expected the gains to be modest. Confidence in the government’s economic policies remained relatively low, with 41% holding negative views.
Consumers’ view on current conditions rose by 5.2% month-over-month to 87.2, supported by lower prices for durable goods. A significant majority — 72% — of those surveyed said now is a good time to buy a new car.
The index reading on future conditions shows a less-optimistic 2.8% month-over-month gain to 74.3. The coming national elections and the forthcoming political battle over the country’s debt ceiling are the likely causes of the more temperate view of future conditions.