Confidence among U.S. consumers unexpectedly improved in August, boosting the prospect of stronger household spending this quarter.
The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment increased to 73.6, the highest level since May, from 72.3 the prior month. The gauge was projected to be little changed at 72.2, according to the median forecast of 72 economists surveyed by Bloomberg.
After two months of sliding sentiment, August’s advance indicates consumers may be feeling the benefits of growing payrolls. Rising confidence raises the odds households can sustain July’s pickup in retail sales, which set the pace for stronger growth in the third quarter.
“The fundamentals behind consumers are not that bad,” George Mokrzan, director of economics for Huntington National Bank in Columbus, Ohio, said before the report. “Consumer finances are improving. We’re actually moving to a stage where we could get some more substantial improvements” in spending.
Estimates in the survey ranged from 69 to 75. The index averaged 64.2 during the last recession and 89 in the five years before the 18-month economic slump that ended in June 2009.