Kevork Djansezian/Bloomberg News
Consumer confidence unexpectedly rose in August, showing a brightening in Americans’ moods as the labor market gains traction.
The Thomson Reuters/University of Michigan final sentiment index rose to 82.5 from 81.8 in July. The median projection in a Bloomberg News survey of economists called for 80 after a preliminary August reading of 79.2.
Payroll gains at their strongest pace since 1999 and muted firings are keeping consumers upbeat about the economic outlook. Stronger wage increases and more broad-based improvement in the labor market may be needed to return sentiment to pre-recession levels and help spur the consumer spending that accounts for about 70% of the economy.
“The main driver of consumer confidence is the job market, and that’s improving,” Michael Carey, chief economist for North America at Credit Agricole CIB. “You’re going to continue to see payroll gains, and some of those people who were not fully employed” will return to the market, providing “a boost to overall labor income.”