US consumer sentiment brightened for a second month in December as Americans looked past a weak labour market and turned more optimistic on the stock market's stability and the economic outlook.
The University of Michigan's final December consumer sentiment index rose to 86.7 from 84.2 in November, market sources who have seen the report said on Monday. That was close to expectations for a final reading of 86.9.
Consumer confidence is closely watched by economists and businesses for clues about spending, which makes up two-thirds of economic activity.
While the index has recovered slightly in the past two months, its sharp slide to a nine-year low in October may explain why holiday retail sales have come in at the low end of forecasts. Earlier in the day Wal-Mart reported that sales growth in December would be at the low end of its forecast.
Analysts said that ongoing weakness in the labour market, with the unemployment rate already at an eight-year high of 6 percent, coupled with the looming prospect of a war against Iraq might check confidence in coming months.
Economists said one factor continuing to support consumer spending is the still solid growth in personal income, which the Commerce Department said rose by 0.3 per cent in November - the fourth straight month of such gains.