U.S. consumer sentiment improved in early January on steady energy prices, better job conditions, and hefty stock gains in early 2006, a report showed on Friday.
The University of Michigan's preliminary January index of consumer sentiment rose for a third straight month to 93.4 from December's final reading of 91.5, according to sources who saw the subscription-only report.
Wall Street economists polled by Reuters on average had forecast the index to have climbed to 92.5 in early January.
The survey's expectations gauge increased to 81.5 in early January from 80.2 in late December.
The index of current conditions rose to 112.0 from 109.1 at the end of December.
Moreover, the survey's inflation outlook dipped to 3.0 from 3.1 in late December.
Confidence measures are often used as a gauge of future spending patterns. Consumer spending makes up roughly two-thirds of overall U.S. economic activity, and is seen as an indication of strength or weakness in economic growth.
However, the connection between consumer confidence and retail sales has been tenuous in recent years. Despite occasional slides in confidence, consumer spending has grown steadily, as consumers borrowed against big gains on their home values and historically low interest rates.
U.S. retail gasoline prices fell in the survey week for first time in three weeks. The national price for regular unleaded gasoline averaged $2.32 a gallon last week, down 0.7 cent from the prior week but up 50 cents from a year earlier, the U.S. Energy Information Administration.
Meanwhile, heating oil prices have fallen in recent weeks amid mild weather across the United States. U.S. retail heating oil prices fell to a five-week low at $2.43 a gallon, down 1.7 cents a week ago but up 46 cents from a year ago, EIA said.
On Thursday, the number of workers filing jobless benefits for the first time fell to 271,000 last week, its lowest weekly level since April 2000, the Labor Department said.
A strong 2006 start to the U.S. stock market also buoyed consumer mood. The Standard & Poor's 500 stock index has risen 2.9 percent in the first half of January, while the Nasdaq composite has gained 4.4 percent.