U.S. Consumer Sentiment Unexpectedly Shows Modest Drop In July

(RTTNews) - Consumer sentiment in the U.S. has seen a modest deterioration in the month of July, according to a report released by Thomson Reuters and the University of Michigan on Friday.

The report showed that the consumer sentiment index dipped to 83.9 in July from the final June reading of 84.1. Economists had expected the index to come in unchanged compared to the previous month.

The drop by the headline index came as consumers were less optimistic about the economic outlook, with the gauge of consumer expectations slipping to 73.8 in July from 77.8 in June.

Meanwhile, the report showed an improvement in the assessment of current economic conditions, with the current conditions index climbing to 99.7 from 93.8.

"Despite the modest setback, consumer confidence remains near six-year highs," said Sal Guatieri, Senior Economist at BMO Capital markets. "A steadily improving labor market should cheer consumers in the year ahead."

On the inflation front, one-year inflation expectations jumped to 3.3 percent in July from 3 percent in June, while the five-to-ten-year inflation outlook held steady at 2.9 percent.