Confidence among US consumers increased in December for the first time in three months as companies slowed the pace of job cuts and stocks advanced.
The Reuters/University of Michigan final index of consumer sentiment rose to 72.5, less than forecast, from 67.4 in November. The figure was lower than the preliminary 73.4 reading, reported on December 11th.
"As job losses become less serious there is some improvement in sentiment," David Sloan, senior economist at 4Cast in New York, said before the report.
"There are signs that spending seems to be improving. The trend seems to be moving in the right direction although not very sharply."
The consumer sentiment index was forecast to rise to 73.8, according to the median of 59 economists. Estimates ranged from 72 to 76.4.
A separate report from the Commerce Department showed US consumer spending rose for a second straight month in November as incomes recorded their biggest gain in six months.
Spending increased 0.5 per cent after rising by a slightly downwardly revised 0.6 per cent in October. Consumer spending in October was previously reported to have increased 0.7 per cent.
Analysts polled by Reuters had expected consumer spending, which normally accounts for over two-thirds of US economic activity, to rise a more robust 0.6 per cent last month.
"On the margin, you'll probably see less consumer spending than what people were thinking. It'll shave back some expectations for Q4 but I don't think this number is going to affect anybody's view of the economic recovery," said Tom Porcelli, senior economist at RBC Capital Markets in New York.
US financial markets were little changed on the data.
The data was the latest evidence that households were starting to feel a bit more comfortable spending after a long period of restraint following the most painful US recession in 70 years.
Data early this month showed a strong rise in retail sales in November, with gains spread across nearly all categories.
Analysts are looking for sustained gains in consumer spending for a clear indication of the economy's ability to stand on its own without support from government stimulus.
The economy grew at an annual rate of 2.2 per cent in the third quarter as government programs such as the popular "cash for clunkers" bolstered spending.
Today's report showed spending adjusted for inflation rose 0.2 per cent in November, adding to the prior month's 0.4 per cent gain. Personal income increased 0.4 per cent last month, the largest increase since May, after rising 0.3 per cent in October.
That was a touch below market expectations for a 0.5 per cent increase.
Commerce Department data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.4 per cent from a year ago in November. The index, which is a key inflation gauge monitored by the US Federal Reserve, increased 1.4 per cent in October.
The Fed last week left overnight lending rates unchanged near zero, citing excess slack in the economy, and pledged to keep interest rates low for an "extended period".
Agencies