Consumer sentiment fell less than forecast in June from an almost six-year high a month earlier as Americans grew more upbeat about the economic outlook.
The Thomson Reuters/University of Michigan said today that its final index of confidence eased to 84.1 this month from 84.5 at the end of May, which was the highest since July 2007. The median forecast in a Bloomberg survey of economists called for 83 in the gauge after a preliminary reading of 82.7.
Rising residential property values and gains in employment have spurred demands for housing and automobiles, underpinning Americans’ confidence in the outlook for the expansion. At the same time, bigger gains in confidence may prove difficult after the recent retreat in stock prices and an increase in borrowing costs.
“Consumer sentiment seems to be holding up fairly well despite some of the more recent turmoil we’ve seen in the market,” Sean Incremona, a senior economist at 4Cast Inc. in New York, who projected a rise in the gauge to 84, said before the report. “Equity prices are still pretty solid, the housing market’s recovering and the job market has looked better over the course of the last several months.”
Stocks maintained losses after the report and another figure that showed business activity cooled more than projected. The Standard & Poor’s 500 Index dropped 0.5% to 1,604.95 at 10:20 a.m. in New York.
The MNI Chicago Report’s business barometer dropped to 51.6 this month from 58.7 in May, which was the highest in more than a year. A reading of 50 is the dividing line between expansion and contraction. The median forecast of 55 economists surveyed by Bloomberg was 55.
Forecasts of the 68 economists for sentiment in the Bloomberg survey ranged from 80.5 to 85.3. The index averaged 64.2 during the recession that ended in June 2009, and 89 in the five years prior.
The Michigan survey compares with the weekly Bloomberg Consumer Comfort Index, which climbed to minus 28.3 for the period ended June 23, its highest level in more than five years, from minus 29.4. The advance was driven by a more optimistic view on shopping, with the buying climate index rising as more households said the time was right to purchase things.
The drop in the Michigan survey this month was centered in the current conditions index, which takes stock of Americans’ views of their personal finances. The measure decreased to 93.8 from 98 in May, which was the highest since August 2007. It compared with a preliminary June reading of 92.1.