US consumer sentiment dropped to a six-month low in June as Americans' view of the economy soured, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 73.2 in June from 79.3 in May.
It was the lowest level since December and fell short of economists' expectations for the index to hold at the same level as June's preliminary reading of 74.1.
The deterioration in consumers' attitudes came mostly from households with incomes above $75,000; sentiment among lower-income households was little changed, according to the survey.
“While the overall level of consumer sentiment is substantially above last summer's low - which would normally indicate a growth slowdown, not a downturn - the buying plans of upper-income households have also sharply declined,” survey director Richard Curtin said in a statement.
“Since these households account for a large share of total spending, if the declines continue in the months ahead, it could have a substantial impact on total spending.”
Wealthier households were also less upbeat about their income prospects, with 24 percent expecting their finances to improve in the year ahead, down from 37 percent in May.
Just 9 percent of all households expected to see gains in their income once adjusted for inflation.
The overall measure of buying plans for durables and vehicles fell to 125 from 132.
The data was eclipsed in financial markets by an agreement from euro zone leaders to allow rescue funds to be used to stabilise the region's banks.
“It wasn't a huge miss, and the average investor should be able to look beyond this and see that we continue to recover,” said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.
News of economic developments heard by consumers was increasingly negative. When asked about their expectations for the unemployment rate, survey respondents were more likely to expect increases rather than declines.
Consumers were also more likely to report economic conditions had weakened recently and less likely to expect them to improve in the coming year.
The survey's barometer of current economic conditions fell to 81.5 from 87.2, and the gauge of consumer expectations slid to 67.8 from 74.3. Both indexes were at their lowest levels since December.
The survey's one-year inflation expectation rose for the first time since March to 3.1 percent from 3.0 percent, while the survey's five-to-10-year inflation outlook climbed to 2.8 percent from 2.7 percent. - Reuters