Upbeat Consumer Report Calms Fears

Americans experienced a rush of confidence in January, a survey showed Friday, calming concerns that a lackluster labor market would crimp consumer sentiment and spending.

Separate data indicated that industrial production slowed in December from November’s hectic pace and that businesses continued to build inventories in November.

Overall, the upbeat tempo of recent data has quashed fears of a sharp slowdown from the frenetic pace of growth in the third quarter, when gross domestic product rose 8.2%.

The University of Michigan reported that its consumer sentiment index leapt to 103.2 in January from 92.6 in December. That was the biggest monthly jump since 1992 and handily beat forecasts of a modest rise to 94.

The consumer expectations index jumped to 99.5 in January from 89.8, while the current conditions index rose to 108.9 from 97 in December.

“It was a lot bigger jump in consumer confidence than people were expecting,” said Wesley Beal, chief U.S. economist at IDEAglobal in New York.

“People are going to get bigger tax return checks in the first quarter as part of the tax cut, and with strong consumer confidence, that improves the consumer spending outlook in the first quarter,” he added.

The output of American factories, mines and utilities rose 0.1% in December. Analysts had expected a 0.6% gain. The percentage of capacity in use held steady at 75.8%.

A report Friday on business inventories showed stocks at manufacturers, retailers and wholesalers rose 0.3% in November.

That was just above the 0.2% gain expected and implied restocking would add further to growth in the last quarter and could well continue this year.