Univ. Michigan: Consumer Sentiment Improving in Dec.

U.S. consumer sentiment improved in early December more than economists had expected, helped by falling gasoline prices and continuing job growth, the University of Michigan said on Friday.

The University of Michigan's preliminary December index of consumer sentiment rose to 88.7 from November's final reading of 81.6, according to sources who saw the subscription-only report.

Economists polled by Reuters on average had predicted an increase to 85.5.

The survey's expectations component increased sharply to 77.3 for early December from 69.6 in November.

The index of current conditions rose to 106.6 from 100.2 in November.

U.S. gasoline prices have fallen to a six-month low after setting a record high of $3.07 a gallon in early September due to supply disruption caused by Hurricane Katrina.

Average retail gasoline prices decreased for a ninth consecutive week to $2.15 a gallon, down 0.7 cent from a week early but up 24 cents from a year ago, the U.S. government said on Monday.

Last week, U.S. employers added 210,000 jobs in November with the jobless rate holding steady at 5 percent, the government said.

"The labor market has been robust. In the last month, we got a good payrolls report so that probably helped," said Elisabeth Denison, economist at Dresdner Kleinwort Wasserstein in New York.

Confidence measures are often used as a gauge of future retail sales. Consumer spending makes up roughly two-thirds of overall U.S. economic activity, and is seen as an indication of strength or weakness in economic growth.

However, the connection between consumer confidence and spending has weakened in recent years. Retail sales have been sturdy despite intermittent declines in confidence.

U.S. retailers reported a brisk start to the holiday shopping season at the end of November.