WASHINGTON – U.S. economic data are outperforming expectations more than they have in nine months, a trend Federal Reserve officials may incorporate into their policy statement today.

The Citigroup Economic Surprise Index, a daily measure of whether economic data is better or worse than economists’ projections, improved to 85.7 on Dec. 2, the highest since March 9, after the Labor Department reported an unexpected drop in the jobless rate. The index is calculated on a three-month rolling basis and weighted for the importance of the indicator.

‘UNDERLYING STRENGTH’

“Most of the economists are missing the underlying strength” in the world’s largest economy, said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. The Fed will “modestly upgrade the economic outlook but change little else.”

November unemployment at the lowest level in more than two years and manufacturing running at the fastest pace in five months are among data that may dissuade Fed Chairman Ben Bernanke and fellow central bankers from pursuing a third round of large-scale asset purchases.

The Fed has bought more than $2 trillion in government bonds and mortgage-backed securities to try to cut long-term rates and lower borrowing costs.

At the same time, the Fed may still see “significant downside risks” for the economy as Europe’s financial crisis evolves.

Michael Feroli, chief U.S. economist at JPMorgan Chase in New York, said in an email to clients that it’s “not obvious” policymakers will drop that phrase from their statement. The Fed’s Open Market Committee “has already been whistled offsides for optimism a few times in this recovery, and more recently seems to prefer to err on the side of caution.”

BACK FROM JUNE PLUNGE

Still, the Economic Surprise Index has rebounded since plunging in June to minus 117.2, the lowest reading since the recession.

A positive reading means that economic figures have been stronger than the median projections in Bloomberg surveys.

“We get these recurring cycles where people get overly optimistic or overly pessimistic, but as things go, this was a pretty significant one,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Conn.

The Labor Department reported Dec. 2 that the unemployment rate last month dropped to 8.6 percent, 0.3 percentage point below the lowest forecast in a Bloomberg survey of 84 economists.

Other figures indicate little need for a third round of large-scale asset purchases at the Fed’s meeting in Washington, according to Stanley.

“A couple months ago, I would have said yes,” he said. “Now I’d probably lean toward saying no, and the reason is just the improvement in the data.”

MORE JOBS THAN FIRST REPORTED

In September, the Labor Department reported employment stagnated in the prior month, adding to concerns that the world’s largest economy was teetering toward another recession.

Revised figures indicate the pessimism about the labor market was misplaced. The agency’s revisions show some 104,000 jobs were added in August.

Combined with updates to September and October, payrolls increased 231,000 more than initially reported in the three months after the Labor Department’s revisions.

The stronger jobs figures may help explain the improvement in holiday shopping.

Initial claims for jobless benefits in the week ended Dec. 3 fell to 381,000, the fewest since February, the Labor Department reported last week.

The Institute for Supply Management’s factory index increased to 52.7 last month from 50.8 in October, the Tempe, Ariz.-based group said Dec. 1.

Readings above 50 indicate expansion, and economists surveyed by Bloomberg projected a gain to 51.8.

RETAILERS UPBEAT

The Institute for Supply Management-Chicago Inc.’s business barometer increased in November to the highest reading since April as orders and production strengthened.

“What I hear as I talk to different retailers is, No. 1, that the retail season has come on through the holiday weekend somewhat better than they thought,” said Kenneth Chenault, CEO of American Express Co., at a Dec. 7 conference in New York sponsored by Goldman Sachs.

“A number of the online retailers that I’ve spoken to over the last week, and you’ve certainly seen the numbers, have been very encouraged by what they saw.”