Optimism rebounds among US shoppers

Retail demand remains subdued, but steady

American consumers are at their most confident for 12 months, providing yet more evidence that retail trade is holding up well, a key report has said.

The University of Michigan consumer sentiment index, a closely watched indicator of likely spending habits, rose to 94.2 in January, its highest level in a year, and well up from the low-80s figures seen after 11 September.

The survey came as Michael Moskow, president of the Chicago Federal Reserve, a regional branch of the US central bank, argued in a speech that the Christmas shopping season had been better than some had feared.

The holiday season was widely seen as make or break for many US retailers and manufacturers, after consumer and commercial demand wobbled in the last three months of 2001.

Earlier this week, official figures showed that retail sales in December were down just 0.1% year on year, a less drastic fall than some had feared.

Shopper do their bit

If the US economy, as some predict, is to rebound this year, a revival is expected to be driven by retail sales.

Consumer demand - directly and indirectly - accounts for two thirds of US economic activity.

Since 11 September, predictions of a complete collapse in consumer sentiment have remained unfulfilled in the US and Europe.

In the US, sales and confidence tottered in October, but have since steadied.

January's rise in the Michigan index was its fourth straight monthly increase.