EmailThe final reading for the University of Michigan Consumer Sentiment survey for May rose to 79.3 from a preliminary reading of 77.8. The final reading exceeded the Briefing.com consensus estimate of 77.5, yet the real headline is that the May number marks the highest reading since October 2007. This is a report that flies in the face of concerns about Greece and the eurozone, JPMorgan's trading loss, China's economic slowdown, and a global sell-off in equities that has seen nearly $4.0 tln of global equity market value erased since the end of April. Presumably, the drop in gas prices coupled with more encouraging reports of late surrounding the housing sector and the labor market have helped underpin consumer sentiment. Strikingly, the equity market did not respond enthusiastically to the headline number.
That could be interpreted as the market not believing this survey data will translate into encouraging hard data for consumer spending, or, perhaps, it is a report that is simply being swept under the rug by the specter of macro uncertainty that can easily sway sentiment to the downside. Either way, the takeaway is that this is a good number that has been greeted with an initially bad reaction. The Current Conditions Index jumped to 87.2 from 82.9 in April while the Expectations Index rose to 74.3 from 72.3 in April. The Expectations Index, according to Bloomberg.com, is at its highest point since July 2007.
