U.S. consumer sentiment rose more than expected as optimism picked up for incomes and the economy, suggesting support for growth in coming months.
The University of Michigan's preliminary March sentiment index advanced to 97.8, the highest this year, compared with the median forecast of 95.6 in a Bloomberg survey of economists, according to a report Friday. The measure of current conditions increased while the expectations gauge rose to the highest since October.
The increase in sentiment reflected a sizable jump in income expectations among middle and lower earners, while a measure of the economic outlook for the next 12 months rose to a four-year high.
The report follows Labor Department figures showing average hourly earnings rose last month by the most since 2009. While below the 14-year high reached in 2018, sentiment remains elevated, supported by rising wages, a stock-market rebound, lower fuel prices and the Federal Reserve's patient approach to raising interest rates.
At the same time, a measure of buying conditions for long- lasting goods fell to the lowest since 2015, suggesting consumers are reluctant to tap their rising incomes to make big purchases.
Consumers continued to anticipate muted gains in prices. Inflation expectations for the year ahead fell to 2.4 percent, the lowest since 2017, while the rate over the next five to 10 years was seen at 2.5 percent, up from a reading last month that matched a record low. Fed officials closely monitor the inflation results in this poll.
Households in the bottom two-thirds of incomes were more likely to cite net income gains, while upper-income households were more likely to report declines, according to the report.
Optimism over the labor market increased, as the share of respondents expecting increases in the jobless rate in the year ahead fell to 21% from 31%. Respondents saw an average chance of 15.5% of losing their job in the next five years, the lowest reading since 2007. Interviews were conducted from Feb. 27 to March 13.
