Consumer sentiment jumps to 5-month high

June 27 05:32 2015

Consumers adopted a sunnier attitude toward the economy in June, according to a survey of consumers released Friday, following a upward trend in economic reports this week. The consumer sentiment index rose 6% in June from a month ago to 96.1, said the University of Michigan. The results put the index 16.5% above June last year and marked the biggest increase since 2004. The index is now at a five-month high.

The metric, which asks consumers to evaluate prospects for the nationGTY 150427674 A CGO FIN USA CAal economy, their personal finances, and buying conditions, beat expectations of 94.6, according to a Bloomberg survey. Consumers’ souped-up spending attitude in Friday’s report falls right in line with other recent economic indicators.

Consumer spending hit a six-year high in May, rising 0.9%, after personal income crept up 0.5%, the Bureau of Economic Analysis said Thursday. Based on Friday’s report, it looks like consumers expect these trends to continue. “Consumer spending will remain the driving force of economic growth in 2015,” said the chief economist on the report, Richard Curtin. He predicted 3% growth in consumer spending during 2015.

The survey also showed an 8% month-over-month increase in consumer perceptions’ of economic conditions and a 4.3% month-over-month increase in consumer expectations. Spending has been buoyed in recent months by an improved labor market. The “quit” rate hit a seven-year high in March, and job openings hit a 14-year high in April, according to the Labor Department. With reports on consumer confidence, payroll, hourly earnings and unemployment numbers slated for release next week, economists aren’t projecting a slow down. Paul Ashworth, economist at research firm Capital Economics, predicted “healthy” results for the employment market.