Consumer Sentiment, Chicago Manufacturing Improves in May

Two economic reports released on Friday covering the current month appeared to show the U.S. economy gained momentum after the war in Iraq ended.

The University of Michigan said its final consumer sentiment index for May rose to 92.1, the highest since last June, from a reading of 86 in April. The preliminary reading earlier this month was 93.2.

In addition, the Purchasing Management Association of Chicago said its index of area business activity rose to 52.2 in May, on a seasonally adjusted basis, from 47.6 in April. Readings above 50 indicate that business is improving.

The purchasing managers' index was expected to rise to 49, Reuters reported.

Another report released Friday by the Commerce Department said that U.S. personal spending in April fell 0.1% to $7.55 trillion at an annual rate. (Click here for the full story.)

Meanwhile, Bloomberg noted that consumers are feeling more confident because fighting in Iraq has concluded, gasoline prices are falling, mortgage rates are the lowest on record and stocks are up for a third straight month.

The current conditions index, which reflects Americans' perception of their present financial situation, declined to 93.2 this month from 96.4 in April and the preliminary May reading of 94.1.

However, the expectations index, based on optimism about the next one to five years, rose to 91.4, the highest in a year, from 79.3 in the previous month. The preliminary indication had been 92.7.

The Chicago report showed that its production index rose to 60.5 from 51. The index had its biggest decline in 23 years in March, ending more than a year of production gains.

The survey's inventories index declined to 42.3 from 43. The region's factories have been cutting stockpiles for more than three years. That means factories have to increase production as new orders arrive.

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