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US: Consumer sentiment jumps higher in early January

Mon, Jan 22 2007, 17:59 GMT
by KBC Market Research Desk

KBC Bank


US: Consumer sentiment jumps higher in early January

Consumer sentiment improved sharply in early January according to the preliminary Michigan report. The improvement was driven by lower energy prices, higher wages and improved economic prospects according to the Michigan analysts. Looking to the details, the headline index jumped unexpectedly to 98 from 91.7 previously. Consensus was looking for a figure in the vicinity of 92. The details fully underpinned the jump in the headline index. Both the current situation index and the expectations index rose substantially. Consumers were more optimistic about their personal finances, the business outlook and rated buying conditions as excellent. The 1-year ahead inflation expectation ticked higher to 3% from 2.9% previously, while the 5-to-10-year inflation forecast stabilized at 3%. While the relationship between consumer sentiment and consumption expenditures are rather loose, it is an encouraging development. Lower energy prices will in the ST probably keep consumption at elevated level.

Other: UK retail sales surprise on the upside

In December, UK retail sales rose a strong 1.1% M/M raising the underlying three month growth rate from only 0.5% in the three months to November to 1.4% in the three months to December. This will further raise speculation on an early Bank of England rate hike.

Published on  Mon, Jan 22 2007, 18:17 GMT

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This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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