Consumer sentiment in the U.S. has unexpectedly seen a continued improvement in the month of May, according to a report released by Reuters and the University of Michigan on Friday, with their consumer sentiment index jumping to a four-year high.
The report showed that the consumer sentiment index for May rose to 77.8 from the final April reading of 76.4. The increase came as a surprise to economists, who had expected the index to edge down to 76.2.
With the unexpected increase, the Reuters/University of Michigan consumer sentiment index rose to its highest level since January of 2008.
Peter Boockvar, managing director at Miller Tabak, said, "While a coincident indicator rather than something leading in terms of consumer behavior, it's likely that the continued drop in gasoline prices had a positive impact."
A notable improvement in consumers' assessment of current economic conditions contributed to the unexpected increase by the index.
The current economic conditions index jumped to 87.3 in May from 82.9 in April, also reaching its highest level since January of 2008.
On the other hand, the report also showed that the consumer expectations index dipped to 71.7 in May from 72.3 in April.
Jennifer Lee, senior economist at BMO Capital Markets, said, "Although this particular survey has been known to make significant revisions by month-end (what was a drop became an increase, for example), one must really admire consumers for their spunk."
With regard to inflation, one-year inflation expectations eased to 3.1 percent in May from 3.2 percent in April, while five-year inflation expectations rose to 2.9 percent from 3.0 percent.
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