NEW YORK – U.S consumer sentiment rebounded off nine-year lows in April, as the war in Iraq wound down, market sources told Reuters Friday.
The University of Michigan (search)'s final April index of consumer sentiment jumped to 86.0, a bit above economists' forecasts of 84.8, from 77.6 in March. The final reading in March was the lowest since September 1993.
"It's hopeful," said Elisabeth Stoegmueller, economist at Dresdner Kleinwort Wasserstein in New York. Rising consumer sentiment suggests that some uncertainty has been removed from the picture for consumers.
But that does not mean that consumer spending (search) is likely to sales increased 7.3 percent in March. Existing home sales fell by 5.6 percent, but to levels still strong by historical standards.
People are not just spending on big ticket items. Retail sales rose 2.1 percent in March over February, the biggest monthly gain since October 2001.
Spending does not have any lost ground to reclaim. But even if more spending is not in the cards, the final University of Michigan index level for April shows that Americans are pleased that fighting in Iraq is mostly over.
The current conditions index, which tracks consumers' attitudes about their present financial situation, rose to a a final reading of 96.4 from 90.0 in March. The expectations index, which gauges the 12-month outlook, increased to 79.3 from 69.6.
Sentiment could rise further, because the fundamentals for the economy look good, economists said. Energy costs have decreased, and first-quarter earnings have so far been pretty solid.
U.S. stocks, bonds and the dollar showed a muted reaction to the Michigan consumer sentiment data, because they were not substantially out of line with expectations.
The news from the University of Michigan survey isn't all good: the index is still low by historical standards, said Nancy Vanden Houten, economist at Stone & McCarthy Research Associates.
Until the economy actually does pick up, confidence will remain relatively low, she added.
The economic recovery is still on shaky footing. A report on Friday morning said that the U.S. economy grew at an anemic 1.6 percent in the first quarter, short of the 2.3 percent increase that Wall Street economists had forecast.
A report on Thursday showed that the already weak labor market is stumbling again. The number of first-time claims for jobless benefits filed last week hit its highest level in a year, the Commerce Department said.
Consumer confidence measures have been rising all month.
Investor's Business Daily and TechnoMetrica Market Intelligence said early in April that their monthly Economic Optimism index rose to levels signaling optimism, after sliding for most of the last 10 months.
The preliminary University of Michigan index of consumer sentiment for April, released in the middle of the month, had risen to 83.2 from 77.6 in March.
ABC News/Money Magazine's weekly consumer comfort index, published on Tuesday, rose to its highest level in seven months last week.
The University of Michigan consumer sentiment survey is based on telephone interviews with 500 U.S. households over the course of the month on personal finances and business and buying conditions. The preliminary survey, released about midway through the month, is based on the first 250 interviews.