NEW YORK (Reuters) - U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labor market, in a further sign that the economy was regaining steam after faltering in the first half of the year.
While other data on Tuesday showed a moderation in house prices in June, the gains probably remain sufficient to boost household wealth and continue to support consumer spending, as well as make home purchasing affordable for first-time buyers.
“This will likely be interpreted as more evidence that the U.S. economic recovery is back on track following the missteps earlier this year,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
The Conference Board said its consumer confidence index increased 4.4 points to 101.1 this month, the highest reading since September 2015. Consumers’ assessment of both current business and labor market conditions improved sharply in August.
The survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, was the most favorable since January 2008.
This measure, which closely correlates to the unemployment rate in the Labor Department’s employment report, is pointing to further declines in the jobless rate and labor market slack.
Economists said this supported views by Federal Reserve officials that the jobs market was either at or near full employment. Fed Vice Chairman Stanley Fischer said on Tuesday that jobs market was “very close to full employment.”
Consumers’ bullish assessment of the labor market this month could be reflected in August’s employment report, which is scheduled for release on Friday, economists said.
“This labor differential index supports our view that payrolls is likely to be quite robust in August. We expect to see job gains in the 215,000 neighborhood,” said Bricklin Dwyer, an economist at BNP Paribas in New York.
A separate survey last week showed an ebb in consumer sentiment this month.
The dollar rose to a two-week high against a basket of currencies, while prices for U.S. government debt fell. U.S. stocks were trading lower as Apple AAPL.O shares slipped after European Union anti-trust regulators ordered the tech giant to pay about $14.5 billion in back taxes to the Irish government.
STREAM OF UPBEAT DATA
The consumer confidence report added to strong data on consumer spending, residential construction, durable goods orders and industrial production that have suggested an acceleration in economic growth after output expanded at 1.0 percent in the first half of the year.
The steady stream of solid economic reports could give the Fed ammunition to raise interest rates this year, even as inflation pressures remain benign.
The U.S. central bank hiked interest rates at the end of last year for the first time in nearly a decade, but has held them steady since amid concerns over persistently low inflation. Most economists expect another rate hike in December.
“We advise Fed officials to throw their caution to the wind just like the American consumer is. It is time for Fed officials to get back on track and move rates up at a gradual pace,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
Separately, the S&P CoreLogic Case-Shiller composite home price index of 20 U.S. metropolitan areas rose 5.1 percent in June from a year ago after increasing 5.3 percent in May.
Prices in the 20 cities fell 0.1 percent in June from May on a seasonally adjusted basis, the survey showed, matching expectations for a decline of 0.1 percent.
On a non-seasonally adjusted basis, prices increased 0.8 percent from May. Home prices in three U.S. cities - Denver, Seattle and Portland, Oregon - showed the highest year-over-year gains, the survey showed.
The Conference Board survey this month showed a rise in consumer intentions to purchase a home as well a plans to buy major household appliances.
“Today’s reading is consistent with consensus forecasts for a moderate upward trend in home sales,” said Andrew Hollenhorst, an economist at Citigroup in New York.
Reporting by Lucia Mutikani and Chuck Mikolajczak; editing by Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.