UMich Consumer Sentiment Bounces in Early Nov.

U.S. consumer sentiment bounced in early November from a nine-year low as stabilization in the job and stock markets and a sharp half-point interest rate cut by the Federal Reserve lifted Americans' spirits.

The University of Michigan's preliminary November consumer sentiment index rose to 85.0 from a final 80.6 in October, market sources said Friday. That put a halt to a five-month slide in sentiment and beat forecasts of a rise to 82.3.

"It's a good number," said Ian Morris, chief U.S. economist at HSBC Securities (USA). "It may reflect that equities have held onto their gains, the sniper murders out of way, the Iraq situation appears to be going reasonably well ... as well as a Fed rate cut."

The gain was led by the expectations index, which tracks attitudes about the 12 months ahead. It rose to 79.2 from 73.1. The preliminary current conditions index, which correlates more closely with spending, rose from a nine-year low to 93.8 in November from 92.4.

Analysts track measures of consumer confidence for clues on consumer spending, which drives about two-thirds of the U.S. economy and has remained fairly robust through the economy's downturn.

Concerned that the recovery was in danger of faltering, the Fed last week slashed its benchmark short-term interest rate by half a percentage point to 1.25 percent, a new four-decade low. The central bank said the cut would help ease the economy through what it called a "soft patch."

Retail sales, which make up about 40 percent of total consumer spending, were unchanged in October, the government said this week. Without autos, retail sales rose 0.7 percent, the biggest gain in six months and much better than expected.

That helped calm some concerns about the crucial holiday shopping season.

Most U.S. retailers book about a quarter of their sales during the November-December holiday period and some make the bulk of their profits in that period. Analysts said the improvement in sentiment offered hope for reasonable sales.

U.S. Treasury prices held at lower levels after the data were released and the dollar ticked up modestly. Stocks got an initial boost but the major averages were trading slightly lower on the session.

The University of Michigan preliminary consumer sentiment survey is based on telephone interviews with about 300 Americans across the country on personal finances and business and buying conditions. The data are released directly to subscribers only and are obtained through market sources.