U.S. consumer sentiment rose to a four-month high in September as inflation expectations signaled a positive outlook for price pressures in the next year. Preliminary results from the University of Michigan‘s consumer survey revealed that the index of consumer sentiment rose 1.1 points to 69.0 in September, from 67.9 in August, the highest since May.
“Year-ahead expectations for personal finances and the economy both improved as well, despite a modest weakening in views of labor markets,” stated Surveys of Consumers director Joanne Hsu.
U.S. consumer sentiment rose due to an improvement in buying conditions for long-lasting manufactured goods as consumers perceived prices to be favorable. Consumer expectations for personal finances and the economy in the next year also improved.
U.S. consumers’ one-year inflation expectations fell for the fourth consecutive month to 2.7 percent, the lowest since December 2020. However, the five-year inflation outlook edged up to 3.1 percent from 3.0 percent in the prior month.
Consumer sentiment regarding the U.S. labor market was also weaker. The share of consumers expecting the unemployment rate to rise over the next year increased to a 16-month high of 39 percent from 37 percent in August.
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U.S. consumer sentiment on price pressures aligns with recent data that revealed slight increases in producer and consumer prices in August. Import prices declined the most in eight months in August amid a broad decline in the costs of goods. Import prices fell 0.3 percent last month, the largest decline since December 2023, after an unrevised 0.1 percent increase in July, the Department of Labor’s Bureau of Labor Statistics said in a report. Year-on-year, import prices increased 0.8 percent after rising 1.7 percent in July.
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