US consumer sentiment jumps the most since 2016 on renewed hiring efforts

• The University of Michigan's consumer-sentiment index rose to 78.9 in June from 72.3, in May according to preliminary data released Friday.
• "The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys," said Surveys of Consumers chief economist Richard Curtin.
• Still, two-thirds of consumers expect unfavorable economic conditions in the year ahead, due to fears that a second wave of coronavirus cases and persistent high unemployment will damage consumer finances.

US consumer sentiment in June rose the most since 2016, led by renewed gains in employment as the US economy reopens from sweeping coronavirus lockdowns.

The University of Michigan's consumer-sentiment index spiked more than 9% to 78.9 in June from 72.3 in May, according to preliminary data released Friday. It's the second monthly gain for the index after it posted a surprise jump in May after a record slump in April. Still, the index is down nearly 20 points on the year.

"The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys," said Surveys of Consumers chief economist Richard Curtin in a statement.

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The current economic conditions index surged to 87.8 in June from 82.3 in May, while the index of consumer expectations jumped to 73.1 from 65.9 in the prior month.

The jump in sentiment signals that consumers are feeling more optimistic as the US economy reopens and Americans are able to return to work following coronavirus-induced lockdowns that began in mid-March.

"The dip in confidence this time around has been smaller than after the crash of 2008," said Ian Shepherdson of Pantheon Macroeconomics in a Friday note. "Spending, however, has fallen much further, because lockdowns kept people from stores and restaurants."

Still, two-thirds of consumers expect unfavorable economic conditions in the year ahead, due to fears that a second wave of coronavirus cases and persistent high unemployment will damage consumer finances.

Last week, the May jobs report from the Labor Department showed that the US economy added jobs in the month, and the unemployment rate declined to 13.3%. A recovery is still likely to be bumpy, however — this week Federal Reserve Chair Jerome Powell said the US has a long road of recovery ahead.