U.S. consumer sentiment improved in early May, as optimism about jobs reduced the pinch from high gasoline and food prices, a survey released on Friday showed.
* The Thomson Reuters/University of Michigan's survey of consumers showed the preliminary May reading on the overall index came in at 72.4, its highest since February, up from 69.8 in April. * It was above the median forecast of 70.0 among economists polled by Reuters in the wake of last week's government data showing a 244,000 increase in U.S. payrolls in April, the biggest one-month increase in 11 months.
STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO.
For stock prices it's usually a sentiment indicator. When it drops off sharply like it did two months ago it's actually positive for stock prices ... the best gains for the stock market were not when consumer confidence was 110 but in the 50-70 range.
CARY LEAHEY, ECONOMIST AND MANAGING DIRECTOR, DECISION ECONOMICS
The consumer sentiment report was pretty good, but it cuts both ways. There was a big jump in the economic outlook component, but the sag in the current conditions index was a negative. You can't say the consumers are rolling over. But they are spending about 6 percent of their total spending on energy. That's a share that has traditionally been a recession marker for the U.S. economy. Investors know that and, consequently, are starting to factor in the possibility of slower growth ahead because of that.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
We are now nearly two months removed from the CSI's demoralizing decline of ten points (a result of consumers' difficulty managing rising gas prices with stifled wages and correspondingly growing pessimism) but still some five points shy of the level reached earlier in the year when the CSI maintained an average in the mid-70s. If confidence continues to crawl along with these two-point monthly gains, we will not see aspirational confidence levels -- and consequently nor a pickup in spending -- until Q3. That decline had immediately followed the index's impressive ascent to 77.5 in February -- a level reminiscent of optimism three years ago.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
Its stronger than expected, we definitely like to see that development. Especially after that really big March fall, it shows we are continuing to climb out of that hole.
STOCKS: U.S. stocks pare losses briefly.
BONDS: U.S. bond prices held steady at higher levels.
FOREX: The dollar holds steady versus euro