US consumer optimism neared its highest in almost four years in March, buoyed by a strong economy, but spending ebbed toward the end of the month because of colder weather, data showed on Tuesday.
Although the data would have no bearing on the outcome of a Federal Reserve monetary policy meeting due to end later in the day with an expected quarter-point rise in US interest rates, it could have some effect on the Fed's future rate policy.
The Conference Board, a private research firm, said its measure of consumer sentiment jumped to 107.2 from an upwardly revised 102.7 in February, beating Wall Street forecasts of only a modest gain.
"Overall, it is a very strong survey which underlines that the current strength of the labour market is helping buoy consumer confidence and spending," said Richard Iley, senior economist at BNP Paribas, North America.
"And with manufacturing booming, this adds to a strong economy in the short term and one with sufficient momentum to maintain upward pressure on resource utilisation and keep inflation risks bubbling," he added.
The Conference Board's present situation index rose to 133.3 from 130.3, while the expectations component rose to 89.9 from 84.2. This was consistent with forecasts of robust economic growth in the first half of the year and a slight slowing later in 2006 as the housing market cools off. Sentiment surveys are often used as a proxy for future consumer spending patterns, which the Fed monitors very closely when setting monetary policy.
Another report on Tuesday showed US chain store sales in the latest week fell by the largest margin of the year as the late Easter holiday and colder weather in much of the country deterred consumers from spending.
Sales fell 1.6 percent in the week ended March 25 after dipping 0.1 percent in the prior week, according to the International Council of Shopping Centers and UBS Securities LLC.
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