By Brai Odion-Esene

WASHINGTON (MNI) – U.S. consumer sentiment fell slightly in
September according to the final reading of the Reuters/University of
Michigan Consumer Sentiment data released Friday.

The index came in at 68.2 — after September’s inital figure of
66.6 — above median expectations of 67.0, but less than August’s final
reading of 68.9.

The index’s final reading for current conditions, reported at 78.4
earlier in the month, was 79.6 for September, above August’s final
reading of 78.3. Expectations fell to 60.9 vs. 62.9 reported last
month, after coming in at 59.1 in the preliminary reading.

September’s final 1-year inflation expectations by consumers was
2.2% compared to the August expectation of 2.7%. Five-year inflation
expectations came in at 2.7% vs. 2.8% in August.

The fall in consumer sentiment might have been influenced by the
dismal economic data seen throughout last month, from data confirming
the housing market is still struggling, to a national unemployment rate
that jumped to 9.6%.

This was confirmed last week by the nation’s monetary policymakers,
who noted the pace of recovery in output and employment has slowed in
recent months. In a statement following its Sept. 21 meeting, the
Federal Open Market Committee said household spending remains
constrained by high unemployment, modest income growth, lower housing
wealth, and tight credit.

“Employers remain reluctant to add to payrolls. Housing starts are
at a depressed level,” the FOMC said.

The improvement in consumers’ view of current conditions comes as
recent data show signs of not just an improvement in the U.S. labor
market, but in the overall economy as well.

The U.S. Bureau of Economic Analysis Friday reported August
personal income data that was slightly better than expected, adding to
expectations that third quarter real growth will come in at a better
pace than the +1.7% reported for Q2.

August personal income rose 0.5%, in its best gain since May 2009,
while personal consumption expenditure jumped 0.4%, representing a
continuation of solid consumer spending in the third quarter.

The U.S. Labor Department reported Thursday that initial claims for
U.S. state unemployment benefits declined by a larger than expected
16,000 to 453,000 in the Sept. 25 week after seasonal adjustment, when
seasonal factors had expected a fairly flat reading.In the Sept 18 week,
when the survey to gather national employment data is conducted,
continuing claims fell by 83,000 to 4,457,000, the lowest since the June
26 week (4.434 million).

The third estimate of second quarter U.S. GDP reported Thursday
also made for good reading. While only revised up slightly, +1.7% vs.
+1.6% previously, the jump was driven by slightly stronger consumer
spending growth and a larger accumulation of inventories. The former was
revised up to 2.2% from 2.0%, reflecting stronger services consumption.

Incoming data point to an even better gain in the third quarter as
the consumer steadies and business investment in capital goods appears
to have picked up more.

** Market News International Washington Bureau: 202-371-2121 **

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