Jobs optimism lifts consumer sentiment in May

NEW YORK (Reuters) – Consumer sentiment improved in May as job gains offset high gasoline prices, while inflation expectations diminished, a survey released on Friday showed.

Consumers were also more upbeat about the longer term outlook for the economy, the Thomson Reuters/University of Michigan survey showed. Even so, income expectations remained at low levels.

The final reading on the overall index on consumer sentiment was 74.3, up from 69.8 the month before and higher than the preliminary reading of 72.4.

Economists polled by Reuters had expected the index to be unchanged from the preliminary figure.

“Sagging real incomes have made consumers more cautious spenders, with rising gas prices especially troublesome for younger and lower income households,” Richard Curtin, director of the survey, said in a statement.

“The data continue to indicate the maintenance of a moderate pace of consumer spending during the balance of 2011.”

The survey’s gauge of consumer expectations jumped to 69.5 from April’s 61.6. It also came in above a predicted reading of 67.5.

The survey’s barometer of current economic conditions was 81.9, slipping from April’s 82.5 but topping forecasts of 80.2.

The survey’s one-year inflation expectation fell to 4.1 percent from 4.6 percent, its first decline since September 2010. The survey’s five-to-10-year inflation outlook held steady at 2.9 percent.

(Reporting by Leah Schnurr)

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IMF says emirates’ recovery faces political risks

WASHINGTON (Reuters) – Economic recovery in oil-rich United Arab Emirates is gaining strength but still faces risks from political uncertainty in the region, the International Monetary Fund said on Monday.

“Risks to the recovery remain, including from possible economic spillovers of regional events,” the IMF said. “In particular, the current re-pricing of geopolitical risk in the region could lead to more challenging market conditions.”

Government-related entities, or GREs, are carrying a debt load of more than 100 percent of gross domestic product in Dubai and will have hefty rollover needs for some time, posing fiscal and financial risks for the UAE overall the IMF said.

The UAE is a federation of emirates in the Arabian Peninsula, the best known of which is Dubai, though the capital is Abu Dhabi.

The IMF said short-term policies should be aimed at supporting domestic demand to allow adjustment to the economic spillover from regional events.

“While the central bank will maintain its accommodative monetary policy stance, it should also stand ready to provide liquidity to the market in case the re-pricing of risk in the region triggers a reversal of the recent deposit inflows to the banking sector,” the IMF said.

It recommended that government entities limit their borrowing, develop a risk management framework and improve the way their activities are monitored in order to increase investor confidence in their activities.

Though an overhang in real estate and large refinancing needs by overleveraged government entities weigh on the UAE’s short-term outlook, the IMF estimated non-oil related growth in GDP should accelerate to 3.3 percent this year from 2.1 percent in 2010.

(Reporting by Glenn Somerville, editing by Jeffrey Benkoe)

Originally Published On: www.reuters.com – Original Article Here