Consumer sentiment in the United States rose in early May to its highest level in 18 months as an improvement in the stock market, better economic reports and relative calm in the Mideast lifted consumers' spirits.
The University of Michigan's preliminary May consumer sentiment index rose to 96.0, market sources said, a level not seen since December 2000 when the economy began its sharp descent into recession. The index had fallen to 93.0 in April, and May forecasts were for another small drop to 92.7.
A rise in the index could corroborate the view that consumer spending, which underpins two-thirds of the US economy, will not let up in the months ahead.
Retail sales data, which showed a 1.2 per cent growth rate in April were double analysts' forecasts and ensured a strong start to second quarter growth after last year's recession.
Stocks extended gains after the data were released while US Treasury securities plumbed lower as the report made it more likely the Federal Reserve will lift short-term interest rates in August from current four-decade lows.
After a red-hot 5.8 per cent growth rate in the US economy in the first three months of this year, economists are feeling more optimistic about a strong growth rate for the entire first half. While inflation remains tame, analysts say the central bank will eventually have to raise rates to ward off future price pressures as the economy firms.
