NEW YORK (Reuters) - U.S. consumer sentiment unexpectedly strengthened in early April as consumer optimism on current economic conditions climbed to its strongest level since November 2000, a private survey released on Thursday showed.
The University of Michigan Surveys of Consumers said its preliminary April consumer sentiment index rose to 98.0, up from a final March reading of 96.9. Analysts polled by Reuters had forecast a reading of 96.5.
“Consumer sentiment inched upward in early April mainly due to more favorable views of current economic conditions,” the survey’s chief economist Richard Curtin said in a statement.
Consumers’ outlook on the economy improved following Republican Donald Trump’s presidential win in November. Some consumers have hoped for more jobs and higher income due to tax cuts, infrastructure spending and looser regulations that Trump pledged during his campaign.
The survey’s gauge on current economic conditions climbed to 115.2 in early April, which was the highest since November 2000. This compared with the March final reading of 113.2 and a forecast of 112.4.
Consumer sentiment is seen as a predictor of consumer spending which accounts for more than two-thirds of the U.S. economy.
“The continued improvement in the headline index since November remains consistent with strong consumer sentiment, although this confidence has yet to translate into stronger activity for the household sector, with retail sales and personal consumption data for January and February coming in on the soft side,” Barclays economist Blerina Uruçi wrote in a research note.
The survey’s barometer on consumer expectations edged up to 86.9 from the March final figure of 86.5 and a forecast of 86.0.
There remained a sharp divide on the outlook on the economy based on political party affiliation, Curtin said.
Republicans in general anticipated better times ahead, while Democrats on average were gloomy. This resulted in a 50.5-point gap between the two groups’ economic outlook, according to the latest University of Michigan survey.
Consumers’ inflation outlook in a year and five years was unchanged from late March at 2.5 percent and 2.4 percent, respectively.
Reporting by Richard Leong; Editing by Chizu Nomiyama