PREVIEW-U.S. prelim Jan consumer sentiment seen up vs Dec

WHAT: Thomson Reuters/University of Michigan’s Surveys of
Consumers preliminary reading on January consumer sentiment

WHEN: Friday, Jan. 14, at 9:55 a.m. (1455 GMT)

REUTERS FORECAST:

* Sentiment index is expected to rise to 75.4 in January
from 74.5 in December. Forecasts from economists polled by
Reuters range from 73.0 to 78.0.

* Current economic conditions gauge is seen down at 84.6
from 85.3 in December.

* Barometer of consumer expectations is seen up at 68.3. It
ended December at 67.5.

FACTORS TO WATCH:

Economists expect sentiment to have risen in early January
from December, when sentiment hit the highest level since
June.

The median Reuters forecast of 52 economists for
preliminary January sentiment is 75.4, up from 74.5 at the end
of December.

Improved job prospects and larger discounts from retailers
has helped sentiment lately, but analysts still are unsure how
much consumers will be able to push forward the U.S. economic
recovery.

Several big U.S. retailers including Macy’s Inc (M.N: )
missed estimates for December same-store sales after a
post-Christmas blizzard that slowed a two-month shopping spree.
The sales news came as a disappointment to analysts and
investors, who had been anticipating more upbeat holiday season
sales.

A day later, the government’s monthly jobs report showed
U.S. employers hired fewer workers than expected in December,
and an unexpectedly large number of people gave up searching
for work, suggesting the Federal Reserve may need to continue
efforts to support the economy with bond purchases.

Still, the extension of the Bush-era tax cuts has worked to
bolster consumer confidence, analysts said.

“If you look at consumer confidence over the past year and
half, it’s generally been trending higher, although it’s been
pretty volatile from month to month and quarter to quarter,”
said Michael Sheldon, chief market strategist at RDM Financial,
Westport, Connecticut.

“Probably the most important economic indicator to watch
that will influence (sentiment) is job creation, and numbers
have been mixed over the past six to 12 months,” he said. “If
gasoline prices continue to rise that could also have a
negative impact on consumer sentiment.”

Oil futures on the New York Mercantile Exchange are trading
around $91 a barrel.

Investors will be keen to see more on retail sales, and
with the government’s retail data also due out on Friday, that
could overshadow the sentiment survey, said Fred Dickson, chief
market strategist, D.A. Davidson & Co. Lake Oswego, Oregon.

Consumer spending typically accounts for about two-thirds
of U.S. economic activity and is considered critical to the
recovery.

MARKET IMPACT:

A stronger-than-expected sentiment reading could help
stocks (.SPX: ), which were slightly lower on Thursday following
an unexpected rise in weekly jobless claims.

Better sentiment tends to be supportive for the U.S. dollar
against the euro (EUR=: ), although the euro’s rise this week
could continue after solid Spanish and Portuguese bond auctions
eased concerns about the euro zone debt crisis for the time
being.

In the Treasury market (US10YT=RR: ), stronger-than-expected
readings on consumer sentiment could exert downward pressure as
they portend a pickup in consumer spending and economic growth
and raise expectations the Fed may raise interest rates sooner
than previously thought.
(Reporting by Caroline Valetkevitch, with additional reporting
by Richard Leong; Editing by Leslie Adler)