U.S. Consumer Confidence Increased in August -- 2nd Update

By Sarah Chaney Features Dow Jones Newswires

A measure of U.S. consumer confidence rose in August to the second highest reading since late 2000, a positive sign for growth in consumption in the coming months.

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The Conference Board on Tuesday said its index of U.S. consumer confidence rose to 122.9 in August from a revised July figure of 120.

The index in March hit 124.9, its highest level since December 2000, toward the end of a historic tech boom. Despite sliding downward from the March high in recent months, the index has remained at high levels, buoyed by labor market strength and soaring stock prices.

Consumers stating jobs are "plentiful" rose to 35.4% in August from 33.2% in July, while those claiming jobs are "hard to get" decreased to 17.3% from 18.7%. The favorable outlook comes against the backdrop of a 4.3% July unemployment rate, tying a 16-year low.

"The labor market is definitely the primary reason for the increases in confidence we've seen," said James Bohnaker, economist at IHS Markit. With the accumulation of job and income gains, "people are feeling pretty good," he said.

The cutoff date for the survey was Aug. 16, meaning many responses would have been captured in the face of political turmoil this month, including the nuclear threat from North Korea and violence in Charlottesville, Va., underscoring the strength of economic conditions.

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"Against that backdrop, there is every reason to expect consumption growth to remain relatively rapid in the coming months and quarters," said Michael Pearce, U.S. economist at Capital Economics, in a note to clients.

The rise in confidence was primarily driven by an increase in the present-situation index, which rose to 151.2 in August from a month earlier. The expectations index increased slightly to 104 from 103.

"Consumers' short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate an acceleration in the pace of economic activity in the months ahead," said Lynn Franco, the Conference Board's director of economic indicators.

Measures of sentiment across the board have illustrated strength in recent months. The University of Michigan said the preliminary reading of its consumer-sentiment index was 97.6 in August, up from 93.4 in July.

Economists follow these surveys on the basis that an increase in optimism should translate into increased consumer spending. Personal-consumption expenditures advanced at a 2.8% pace in the second quarter, up from a 1.9% gain in the first quarter.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

August 29, 2017 15:38 ET (19:38 GMT)