Consumer sentiment in the U.S. has improved by much more than anticipated in the month of July, according to preliminary data released by the University of Michigan on Friday.
The report showed the consumer sentiment index soared to 72.6 in July from 64.4 in June. Economists had expected the index to tick up to 65.5.
With the much bigger than expected surge, the consumer sentiment index reached its highest level since hitting 72.8 in September 2021.
The sharp increase by the headline index came as the current economic conditions index spiked to 77.5 in July from 69.0 in June, while the index of consumer expectations jumped to 69.4 in June from 61.5 in July.
"Overall, sentiment climbed for all demographic groups except for lower-income consumers," said Surveys of Consumers Director Joanne Hsu. "The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets."
She added, "Sentiment is now about halfway between the all-time historic low of 50 from June 2022 and the February 2020 pre-pandemic reading of 101."
The report also showed year-ahead inflation expectations crept up to 3.4 percent in July from 3.3 percent in June but remain well below the high point of 5.4 percent in April 2022.
Long-run inflation expectations also inched up to 3.1 percent in July from 3.0 percent in June, again staying within the narrow 2.9-3.1 percent range for 23 of the last 24 months.
