Consumer sentiment picks up in late October: survey

A shopper walks past a store in Boston, October 1, 2009.

NEW YORK (Reuters) - U.S. consumer sentiment improved in October for the second month in a row as consumers felt more upbeat about the economy's prospects, a survey released on Friday showed.

The Thomson Reuters/University of Michigan survey's final reading on consumer sentiment overcame the weakness reported in the preliminary survey earlier in the month, though consumers' personal finance expectations remained gloomy.

The sentiment index picked up to 60.9 from 59.4 the month before, topping expectations for 58.0 among economists polled by Reuters. The preliminary October survey had seen a decline to 57.5.

The survey's gauge of consumer expectations also improved from the more than 30-year lows registered in the preliminary reading. The index rose to 51.8 from 49.4 in September, while the barometer of current economic conditions was up at 75.1 from 74.9.

The improved view of the economy was sparked by more people hearing about favorable job trends. Sixteen percent of respondents said they had heard positive news, up from 12 percent in the last two months. Twelve percent of consumers expected the unemployment rate to decline in the next year, up from 10 percent.

A gauge of current personal finances edged up to 77 from 76, but expected personal finances eased to 103 from 104.

"Overall, it is still likely that real consumer expenditures will not be strong enough during the year ahead to enable the more robust economic growth that is needed to offset the negative grip of income and job stagnation on consumers' spending behavior," survey director Richard Curtin said in a statement.

The one-year inflation expectation eased to 3.2 percent from 3.3 percent, and the survey's five-to-10-year inflation outlook also declined to 2.7 percent from 2.9 percent.

Financial markets were little changed immediately after the data, with Wall Street trading lower as investors took profits after the previous day's strong rally.

The report was in contrast to the Conference Board's consumer confidence report earlier in the week, which showed consumer attitudes fell to their lowest level in two-and-a-half years.

(Reporting by Leah Schnurr, Editing by Chizu Nomiyama)