The reading of consumer sentiment for the full month of October from the University of Michigan did fall 2.7% m/m to 91.7, but that reflected a sharp improvement from the mid-month read of a 7.1% plunge to 87.5. Consensus expectations for a reading of 88.0.

The continuing decline in claims for unemployment insurance may have bolstered confidence following earlier concerns over the War in Iraq, the rising price of gasoline and several hurricanes which hit Florida.

During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.

The reading of current economic conditions improved 0.3% m/m versus the mid-month read of a 4.0% slump. Consumer expectations shaved the mid-month decline in half and fell 4.8% m/m.

The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.