U.S. consumer sentiment strengthened in December as cheaper gasoline bolstered confidence during the key holiday retail season, according to a survey released on Thursday.
The final December reading of the University of Michigan's consumer confidence index was 97.1, up from November's final 92.8 and December's preliminary reading of 95.7, according to market sources who saw the subscription-only report.
Analysts on average had forecast the index would remain unchanged from December's preliminary reading.
The survey's index of current conditions came in at 106.7, up from November's 104.7, and its index of consumer expectations gave a final December reading of 90.9, also up from November's 85.2, market sources said.
"The University of Michigan consumer sentiment measures reflected a nicely balanced increase in optimism and that probably reflects things like the decline in gasoline prices and getting away from the election period," said Patrick Fearon, economist at A.G. Edwards and Sons in St. Louis, Missouri.
"The fact that gasoline prices are coming down now might have an exaggerated impact on sentiment because it fattens consumers' wallets during the holiday season when they need it," he said.
Consumer confidence is considered a barometer of consumer spending, which accounts for two-thirds of the U.S. economy, although the correlation between confidence and retail sales has not been strong in recent years.