Early April good consumer mood for the U.S.

According to a survey released on Thursday and published by Reuters, consumer sentiment in the United States unexpectedly rebounded in early April from a decade low.

There is a strong job market that has lifted the outlook for wage growth and a drop in gasoline prices from the previous month’s record high helped to cap expectations for further acceleration in inflation.

The University of Michigan’s Consumer Sentiment Index rose to 65.7 in the preliminary reading for Apr-22 (Mar-22: 59.4), against the market consensus for a decline to 59.

Consumer mood

“Although the latest reading is still at the lowest since November 2011, the increase in April marks the first improvement since Dec-21 as consumers expressed more optimistic assessment of the near-term business conditions, the economic outlook in the next 12 months and personal finance,” says MIDF.

This is also backed by higher wage expectations given the strong labour market. In the prior month, the weaker sentiment translated to slower growth in retail sales, which rose by +6.9%yoy in Mar-22 (Feb-22: +18.2%yoy).

Looking at the latest sentiment result, we view the improvement as an encouraging development that will be supportive of the consumption outlook.

However, the final reading could still be affected by several factors such as faster inflation, higher borrowing costs or possible tightening of Covid-19 restrictions.