Consumer Sentiment Outpaces Expectations in Preliminary Report

Strengthened labor numbers and hopeful stock market indicators proved to be positive influences for consumer sentiment in early December.

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The ""University of Michigan/Thomson Reuters Index of Consumer Sentiment"":http://press.sca.isr.umich.edu/ climbed to a five-month high of 82.5 in a preliminary report, increasing more than seven points over November's final reading and beating a consensus forecast of 75.5.

Both of the components measuring confidence in current and future conditions increased. The Current Conditions Index (normally affected by job market conditions) rose to its own five-month high of 97.9 from November's 88.0, while the expectations index increased to a four-month peak of 72.7 from 66.8.

While the first December report might reflect heightened optimism for the economy and labor conditions, Amna Asaf, an economist for macroeconomic research firm ""Capital Economics"":https://www.capitaleconomics.com/, says the increase wasn't actually all that dramatic when put into context.

""Seasonal factors also probably played a role,"" Asaf explained. ""The index is unadjusted and our calculations suggest that seasonal factors tend to add 1.5 points to confidence each December. Indeed, on seasonally adjusted terms, the rise in the headline index was slightly modest.""

Nevertheless, the report reinforces confidence that consumption growth is on the rise after a slower third quarter and ""provides more evidence that the economic recovery is strengthening,"" Asaf said.