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US consumer sentiment improved in April to levels seen at the start of the year, driven by a more favourable assessment of current economic conditions.

A preliminary reading of consumer sentiment from the University of Michigan rose to 98 in April, from 96.9 the previous month. That was above economists’ estimates of 96.5.

The uptick came as consumers’ assessment of current conditions rose to 115.2 — its highest level since 2000 and close to its all-time peak of 121.1 set in 1999. That compared to economists’ expectations of 112.5 and was up from 113.2 in March.

“It tends to track the level of jobless claims but now appears to be overshooting significantly,” Ian Shepherdson, an economist at Pantheon Macroeconomics, said. “We expect no further gains, and a correction over the next few months seems a decent bet.”

Consumer sentiment has remained healthy as the US labour market continues to look strong and as Americans await President Donald Trump’s pro-growth and pro-business policies.

However, the report showed that Democrats and Republicans remain divided on the Expectations index.

“The data suggest the beginning of a convergence on the Expectations Index, with the figure for Democrats rising 7% and falling for Republicans by 7%, although the gap still remained an astonishing 50.5 Index points,” Richard Curtin, chief economist of the Surveys of Consumers, said. “Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality.”

Copyright The Financial Times Limited 2017. All rights reserved.
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