Skip to main content

The Globe and Mail

U.S. consumer sentiment hits eight-month high in January

In this July 5, 2011 file photo, pedestrians carrying shopping bags make their way along Fifth Avenue in New York.

Seth Wenig/Seth Wenig/The Associated Press

U.S. consumer sentiment picked up more steam in early January, rising to the highest in eight months as Americans grew more optimistic about job prospects, a survey released on Friday showed.

Separate data earlier in the day showed the U.S. trade deficit widened in November to its largest in five months, suggesting imports weighed on economic growth a bit more than expected during the fourth quarter.

The Thomson Reuters/University of Michigan preliminary January reading on its overall index of consumer sentiment rose to 74.0 from 69.9 in December for the fifth month of gains and the highest level since May 2011.

Story continues below advertisement

The report topped expectations of 71.5 and was in contrast to December's weaker-than-expected retail sales reported on Thursday.

"This shows even though the retail sales number this week was disappointing there could be a little more underlying strength," said Kathy Lien, director of research at GFT Forex in Jersey City.

"I'd be wary of looking at this as a shift in long-term confidence, but I'd look at this as good news today."

U.S. Commerce Department data showed the trade gap totalled $47.8-billion (U.S.) in November, exceeding analysts' forecast of a $45-billion deficit.

A wider deficit shows that more goods and services bought by U.S. businesses and consumers were produced outside the country, subtracting from gross domestic product.

"The external outlook does not bode well for U.S. exports, as a deceleration in global growth will coincide with a stronger U.S. dollar due to lingering financial concerns regarding Europe's sovereign debt turbulences," Martin Schwerdtfeger, senior economist at TD Bank Group, wrote in a note.

Separately, a dip in import prices showed inflation pressures were still muted, giving the Federal Reserve wiggle room as it holds U.S. benchmark interest rates at ultra-low levels.

Story continues below advertisement

Import prices were down 0.1 per cent in December after a 0.8 per cent gain in November, in line with economists' expectations.

Thirty-four per cent of consumers polled in the consumer confidence survey said they had heard of recent job gains, a record high in the survey's history and well above December's 21 per cent.

"The data suggest a stronger consumer spending outlook, rising to about a 2.1 per cent gain in 2012," survey director Richard Curtin said in a statement.

But consumers still lacked confidence in government economic policies with the majority rating policies unfavourably for the sixth month in a row.

Americans also remained dour on their personal finances with just 24 per cent expecting their finances to improve in January, slightly below 25 per cent last month.

The survey's barometer of current economic conditions rose to the highest since February at 82.6 from 79.6, while its gauge of consumer expectations gained to 68.4 from 63.6.

Story continues below advertisement

Report an error
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to