Consumer sentiment improved in early June to its strongest level in nearly 2-1/2 years, bolstered by hopes of better job and credit conditions, a survey released on Friday showed.

The preliminary June reading on the overall index of consumer sentiment rose to 75.5 from 73.6 at the end of May, according to the Thomson Reuters/University of Michigan's Surveys of Consumers. The figure was above the median forecast of 74.5 among economists polled by Reuters.

The latest survey also showed consumer intention to buy durable items like cars has not flagged, although government data released earlier on Friday showed a 1.7 percent drop in vehicle sales last month.

The disparate data on consumer sentiment and spending underscored lingering anxiety about the economy and caution over consumers' personal finances.

Heightened and persistent concerns among consumers with the outlook for their personal finances is the most distinctive aspect of the current recovery, Richard Curtin, director of the surveys, said in a statement.

Consumer sentiment is seen as a proxy for consumer spending, which fuels 70 percent of the U.S. economy.

Consumers, while nervous about their finances, were encouraged by recent economic news, with nearly an equal share reporting hearing about job gains as hearing about job losses -- the best net reading in five years, Curtin said.

The surveys' barometer of current economic conditions was at 82.9 in early June, the highest since March 2008. This compared with 81.0 at the end of May and matched what analysts predicted for early June.

The barometer of consumer expectations also notched higher to 70.7 -- the highest since September 2009 -- from 68.8 in late May and 69,5 predicted by analysts.

The one-year inflation expectations index fell to 2.7 from 3.2 at the end of May, and the five-to-10-year inflation measure edged down to 2.8 from 2.9.

Overall, the data is strong enough to support the continued growth in consumption, although the pace of growth will slow during the balance of the year and into the start of 2011, Curtin said.

The data suggested real consumer spending will average 2.5 percent this year, below its historic average.

(Reporting by Richard Leong; Editing by Padraic Cassidy)

Michigan Inflation