NEW YORK – An index of U.S. consumer sentiment jumped in March to its highest level since December 2000 as the labor market improved and stocks rebounded, a poll showed on Friday.
The upbeat report provided the latest evidence that the economy is recovering quickly from its first recession in a decade. It comes just before the Federal Reserve's meeting next week when it is expected to edge closer toward raising interest rates by saying the economy's risks are balanced rather than tilted toward weakness.
The University of Michigan's preliminary consumer sentiment index rose in March to 95.0 from a final reading of 90.7 in February. Forecasts were for a reading of 92.9. The data are released directly only to market subscribers and were obtained by Reuters.
Consumer sentiment is closely watched by economists because it can offer signals on future household spending, which underpins two-thirds of the U.S. economy.
Solid consumer spending helped make the recession one of the mildest since World War Two, but economists fear a recovery could be sluggish because there is little pent-up consumer demand.
After worries about accounting practices in the wake of Enron Corp.'s collapse had pounded stocks in late January and early February, the blue-chip Dow Jones industrial average <.DJI> has risen 8 percent in the past month.
Meanwhile, the unemployment rate has fallen for the past two months and the economy added new jobs in February for the first time since July 2001.
"Everything is shaping up for there to be an underpinning of recovery. The consumer is looking fairly robust and at the same time manufacturing is look okay," said Alan Ruskin, research director at 4Cast Ltd.
However, a report earlier in the week showed February retail sales were slightly weaker than expected, raising some worries that consumer spending will moderate in the months ahead.
The current conditions index, which measures consumers' attitudes about their present financial situation, rose to 99.3 from 96.2 in February. The expectations index, which tracks attitudes about the 12 months ahead, rose to 92.3 from 87.2 in February.
The consumer sentiment survey is based on telephone interviews with roughly 500 Americans across the country on personal finances, business conditions and buying conditions. A competing index from The Conference Board research group fell in February, snapping two months of gains.