updated 3/11/2005 10:30:32 AM ET 2005-03-11T15:30:32

Consumer confidence, which had plunged sharply in February, jumped by the largest amount in seven months in early March as Americans were heartened by a big surge in hiring.

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The AP-Ipsos consumer confidence index rose to 84.2 in early March, a gain of 6.4 percent from a February reading of 79.1. It was the largest one-month gain since a 13.9 percent rise last August.

The March rebound came from stronger confidence about current economic conditions, job prospects and personal finances. The survey was taken the first three days of this week, following the news last Friday that the economy created 262,000 jobs last month, the best showing in four months.

Even with the big percentage gain in the March index, the overall level remains below where it was at the beginning of the year because the drop in February had been so sharp.

That plunge in confidence was blamed in part on worries about sluggish job growth that had persisted into the new year and worries about the viability of Social Security that had been generated by a new administration push to overhaul the government's giant pension program.

But consumers were feeling better in March, according to the responses they gave to the latest survey. The view of current economic conditions had risen by 12.3 percent, the biggest percentage increase of any of the four main components that make up the overall index.

Feelings about job prospects climbed by 10.9 percent in the March survey compared to February while feelings about personal finances rose by 10.6 percent.

The only component of the index that suffered a dip in March was expectations about the future, which fell by 10.2 percent in the March survey compared to the February level.

The survey is benchmarked to a reading of 100 in January 2002, when Ipsos started the gauge.

Results of the survey, conducted from Monday through Wednesday, have a margin of error of plus or minus 3 percentage points.

Consumer sentiment is closely followed by economists because consumer spending accounts for two-thirds of total economic activity.

Analysts are expecting that consumer confidence will show steady improvements throughout this year, a forecast that is based on their belief that the jobs picture will continue to brighten with the expected creation of more than 2 million new jobs this year.

However, the recent jump in energy prices, with crude oil approaching near record levels earlier this week, could jolt consumer sentiment going forward. This would be especially true if the higher energy costs were to begin seeping out and causing underlying inflation, which has been well behaved, to begin to move higher.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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