Consumer Sentiment Jumps to Beat Forecast in January

Americans showed greater optimism about potential improvements in the job market in January, pushing consumer confidence to its highest level in nearly a year, a survey released on Friday reported.

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The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 75.0 from 69.9 the month before. It was the highest level since February 2011.

That was better than the preliminary January reading of 74.0 and topped the median forecast of 74.1 among economists polled by Reuters.

"The recent gains in confidence are now critically dependent on continued gains in employment," survey director Richard Curtin said in a statement.

"As long as modest employment gains are forthcoming, the data suggest real consumer spending will post a gain of 2.1 percent in 2012."

The index has improved steadily since August when consumer confidence reached a low point due to political wrangling over the debt ceiling in the summer. Despite the five months of gains, the index remains low by historical standards.

"We've come a long way," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

"The measure on current conditions is rising, and that's an important number. We're not quite at the peak we were at in February, but in the longer term, the direction is strong."

The survey's barometer of current economic conditions gained to 84.2 from 79.6, while the gauge of consumer expectations climbed to its highest level since May 2011 at 69.1 from 63.6.

Financial markets had little reaction to the survey as it was eclipsed by earlier data that showed the pace of growth in the U.S. economy picked up in the final months of 2011, but suggested the expansion could slow early this year.

A record 31 percent of consumers spontaneously reported hearing about recent employment gains this month. However, respondents were not as optimistic about the unemployment rate, with half expecting it to remain unchanged.

Americans also remained gloomy about their own financial situation, and most expressed skepticism about the prospective strength of the economy. Confidence in government policies was also stuck near an all-time low.

The survey's one-year inflation expectation rose to 3.3 percent from 3.1 percent, while the survey's five-to-10-year inflation outlook held steady at 2.7 percent.

Earlier this week, the Federal Reserve set an official inflation target of 2 percent, a historic step that brought the Fed in line with many other central banks around the world