U.S. consumer index sinks

U.S. consumer confidence in early August plunged to its lowest level since May 1980 according to the latest reading of the Thomson Reuters/University of Michigan index of consumer sentiment released Friday.

The data added to concerns that high unemployment and recent wild swings on stocks markets will drive consumers into cutting back on their spending.

The index fell to 54.9 from 63.7 the month earlier. The consensus among analysts surveyed by Bloomberg was for a reading of 62.

Unemployment is at 9.1 per cent in the U.S. and financial markets have fallen the most since 2008.

The reportcontrasted with one from the Commerce Department, also released Friday, which said U.S. retail sales rose by 0.5 per cent in July.

That was the biggest climb in four months. The strong retail sales added to a recent trend of more positive data about the economy.

The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment rates.

"Don't write off the American consumer or economy just yet," said Sal Guatieri, senior economist at BMO Capital Markets. "The solid July retail sales report should help allay recession fears."

On Thursday, the government saidapplications for unemployment benefits had fallen to a four-month low.