US consumer sentiment has fallen to a fresh record low, driven by concerns over inflation from the Iran conflict and trade wars. The University of Michigan's index dropped to 48.2 in May, down from April's 49.8, which was itself the lowest on record. The current economic conditions index fell 9% month-on-month as households worried about soaring prices at the pumps.
About one-third of consumers spontaneously mentioned gasoline prices, and 30% cited tariffs, according to the survey. Real income expectations continued a decline that began in March. The report noted that Middle East developments are unlikely to boost sentiment until supply disruptions are resolved and energy prices fall.
Despite the gloom, the US economy added 115,000 jobs in April, beating forecasts of a 62,000 increase. The unemployment rate held steady at 4.3%. However, revisions showed that February and March combined had 16,000 fewer jobs than previously reported. Job gains were concentrated in healthcare, transportation, retail, and social assistance.
In the UK, the pound gained ground after Prime Minister Keir Starmer pledged not to resign following poor local election results. UK house price growth halved, with prices falling slightly in April. Global food prices rose for the third consecutive month, driven by increases in vegetable oils, meat, and cereals.
Toyota reported a £3bn hit from costs related to the Iran war, as parts and materials prices soared and sales dropped. Britain's FTSE 100 index posted its third weekly loss, closing down 0.4% at 10,233.07 points.
The Financial Conduct Authority (FCA) updated on legal challenges to its £9.1bn car finance compensation scheme, including a claim that the plan breaches lenders' rights under the Human Rights Act 1998. A hearing is unlikely before October, and the FCA is considering suspending some elements of the scheme.
