Consumer sentiment slipped modestly in early April as higher gasoline prices hit household budgets but optimism over the economic outlook lifted consumers' expectations, a survey released on Friday showed.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment dipped to 75.7 in April from 76.2 in March. Economists had expected the index to hold at last month's level.
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"Needless to say, the revival of confidence critically depends on the two economic events that consumers still expect to happen: that jobs will become more plentiful and that gasoline prices have ended their sharp run up," survey director Richard Curtin said in a statement.
"Both are widely expected, and these expectations are anchored well enough to withstand temporary disappointments."
The survey's barometer of current economic conditions tumbled to the lowest level since December at 80.6 from 86.0. But the measure of consumer expectations rose to 72.5 from 69.8, hitting its highest since September 2009.
"We're in an economy that's still struggling, and that's what this reflects," said Paul Nolte, managing director at Dearborn Partners in Chicago.
Stocks held steady at lower levels immediately after the data, while the dollar pared gains slightly against the euro.
While references to increasing employment were still favorable, they eased considerably following March's job report that showed the pace of job creation slowed, the survey said.
More survey respondents expected unemployment to decline rather than rise, though half of consumers still expected it to remain mostly unchanged.
Personal finances also weakened due to fewer income gains and higher prices. Forty percent of households said their finances had worsened in the past year.
The survey's one-year inflation expectation eased to 3.4 percent from 3.9 percent, while the survey's five-to-10-year inflation outlook was unchanged at 3.0 percent.
Data earlier in the day showed overall consumer prices rose 2.7 percent year-on-year in March, down from 2.9 percent in February.