August consumer confidence rises

Brighter outlook boosts measure to highest since Sept. ’15

A pedestrian passes a Nordstrom Inc. store at the Easton Town Center shopping mall last week in Columbus, Ohio. Consumer confidence rose in August to its highest level in 11 months, the Conference Board said Tuesday.
A pedestrian passes a Nordstrom Inc. store at the Easton Town Center shopping mall last week in Columbus, Ohio. Consumer confidence rose in August to its highest level in 11 months, the Conference Board said Tuesday.

WASHINGTON -- U.S. consumer confidence rose in August to its highest level in 11 months, raising expectations for a pickup in economic growth in the second half of the year.

The Conference Board said Tuesday that its consumer confidence index rose to 101.1, up from 96.7 in July. It was the highest level for confidence since the index hit 102.6 last September.

The gain reflected consumers' brighter views about the current economic situation and their expectations for the future.

"Consumers' assessment of both current business and labor market conditions was considerably more favorable than last month," Lynn Franco, director of economic indicators at the Conference Board, said in a statement. "Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pickup in growth in the coming months."

The percentage of those surveyed who saw business conditions as "good" increased from 27.3 percent to 30 percent. Those who viewed business conditions as "bad" remained virtually unchanged at 18.4 percent.

Consumers who regarded jobs as "plentiful" increased from 23 percent to 26 percent, although those who felt jobs were "hard to get" also rose slightly from 22.1 percent to 23.4 percent. The difference between those who said jobs were plentiful and those who said they were hard to get was the widest since January 2008.

This reading may raise expectations on what to expect Friday, when the latest nonfarm payrolls report is released. The jobs plentiful-minus-hard-to-get metric has a strong correlation with the unemployment rate.

"Consumers are telling us that payroll growth is sufficient to bring the unemployment rate down," said Neil Dutta, head of U.S. economics at Renaissance Macro Research. "This was the best confidence report so far in 2016."

Many economists are looking for a gain of around 180,000 jobs.

Respondents to the Conference Board survey who are planning to buy new automobiles, homes and appliances in the next six months all increased.

Economists said the climb in confidence reflected stronger job gains in recent months, as well as strength in the stock market and home prices, which increases consumers' net worth.

They expect the momentum in jobs to push incomes higher and spur stronger consumer spending. That should help growth accelerate in the second half of this year, after four quarters of an anemic average growth rate of 1.2 percent. Many analysts believe gross domestic product will top 3 percent in the current quarter.

"Growth will be supported by consumer confidence and job growth," Jennifer Lee, senior economist at BMO Capital Markets, said in reaction to the consumer confidence report.

Information for this article was contributed by Martin Crutsinger of The Associated Press and Patricia Laya and Luke Kawa of Bloomberg News.

Business on 08/31/2016

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