The University of Michigan's consumer sentiment index rose to 88.8 in December from 83.9 in November. That rise beat forecasts of 85.7 and was above the index's low of 81.8 in September. The preliminary reading, released mid-month, was 85.8.

The Michigan sentiment index is down from 112.0 in early 2000 but over the past three months has nearly risen to where it was before the Sept. 11 attacks.

Consumer spending, while not likely to contract in the fourth quarter, will remain sluggish as most Americans expect the 5.7 percent jobless rate to climb more, according to survey director Richard Curtin said.

The University of Michigan's current conditions index edged up to 99.0 in December from 95.3 in November. The preliminary reading for December was 95.9. The expectations index rose to 82.3 in December from 76.6 in November. The preliminary December reading was 79.3.