NEW YORK – U.S. consumer sentiment rose for a fourth straight month to its highest level in a year in January as hopes for a recovery from recession overshadowed lingering worries about jobs, data released Friday showed.
The University of Michigan's closely watched consumer sentiment index surged to 93.0 in January from 88.8 in December, but was revised down slightly from a midmonth reading of 94.2. That was below forecasts of a rise to 94.3.
Economists track consumer sentiment for clues on future consumer spending, which underpins two-thirds of the U.S. economy. American consumers have kept spending through the current recession despite a sharp fall in business investment.
Analysts said the data sharpened a growing view Americans are not likely to pull back on their spending habits.
"Despite the downward adjustment, the January level was the highest in a year," said Steven Wood, economist at FinancialOxygen in Walnut Creek, California. "Most of the revision was due to increased concerns about current conditions, reflecting nervousness about the labor market."
The current conditions index, which measures Americans' attitudes about their present financial situation, fell to 95.7 in January from 99.0 in December -- down from a preliminary 98.1 reading -- showing persistent concerns about the sluggish U.S. economy.
But the expectations index, which tracks attitudes about the 12 months ahead, rallied nine points to 91.3 in January from 82.3 in December. Expectations read 91.7 at mid-month.
Financial markets, focused on key reports that showed a dip in the U.S. unemployment rate to 5.6 percent in January and a rise in a survey of national manufacturing, did not react much to the consumer sentiment data.
"Obviously employment is still negative ... (and) it remains to be seen how much more improvement there's going to be," said James O'Sullivan, senior economist at UBS Warburg in Stamford, Connecticut. "Most people are reasonably confident that some kind of a recovery is coming but these numbers don't tell us conclusively how much yet."
The consumer sentiment survey is based on telephone interviews with roughly 500 Americans across the country on personal finances, business conditions and buying conditions. The report is released directly to subscribers only and must be obtained from market sources.
Another closely watched index, published on Tuesday by The Conference Board research group, rose, led by consumer expectations, which hit their highest level in more than a year in January.