U.S. consumer sentiment rose in May to the highest level since June last year, in line with an improving economy.
The final reading of the consumer sentiment for May increased to 94.7 from 89 in April, said the Thomson Reuters/University of Michigan index of consumer sentiment on Friday.
The data is a little bit lower than the preliminary reading of 95.8 measuring the first half of May, but it was still "substantially higher than last month," said survey director Richard Curtin.
"Consumers became more optimistic about their financial prospects and anticipated a somewhat lower inflation rate in the years ahead," said Curtin. "The biggest uncertainty consumers see on the horizon is not whether the Fed will hike interest rates in the next few months, but the outlook for future government economic policies under a new president," Curtin said.
The sub-index of current conditions, reflecting Americans' perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, rose to 109.9 from 106.7 last month.
The sub-index gauging consumer expectations for six months from now, which more closely projects the direction of consumer spending, increased to 84.9 from 77.6 in April. On the same day, the U.S. Commerce Department raised the growth rate of the U.S. economy in the first quarter from previous estimate of 0.5 percent to 0.8 percent, driven by better data in residential investment.
The U.S. economy is expected to grow faster in the second quarter, reaching 2 to 2.5 percent, because the continuous improving job market will accelerate wage gains, which are expected to support consumer spending and lessen the downside risks to the overall economic growth outlook, said analysts.
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