US economy still in fragile shape

Shopper sentiment is crucial for the US economy

The US economy has sent out more mixed signals, with the news that consumer sentiment is drooping, but factory output on the rise.

The University of Michigan, in its much-watched confidence index, said consumer optimism had slipped yet again in April.

With personal spending so important to the US economy, any gloom among shoppers could spell bad news.

But a survey of Midwestern factories pointed in the other direction.

The National Association of Purchasing Managers Chicago index picked up strongly in April, which could be a sign that longed-for jobs may soon be created.

Ups and downs

The NAPM survey covers only a relatively small corner of the economy - manufacturing companies in the central US.

But after the loss of millions of manufacturing jobs in the past few years, and with elections due later this year, the sector is highly politically sensitive.

"Every indicator is telling us that manufacturing is rebounding very strongly," said Ken Mayland, chief economist at Clearview Economics.

Mr Mayland argued this could herald the beginning of a rebound in industrial employment.

The consumer data, meanwhile, arguably helps reinforce the argument that the US Federal Reserve will not raise interest rates from 1% when it meets on Tuesday.

Gross domestic product data released on Thursday was also below forecast, another indication that economic recovery is still fragile, and certainly a long way from overheating.