US consumer confidence reached its highest point in nearly a year in August as economic conditions continue to improve.
The level indicates that Americans expect the economy to remain strong through the second half of the year.
According to the Conference Board, which tracks consumer sentiment, the index reading for August was 101.1, up from 96.7 in July.
The index has not reached such a high point since September 2015.
“Consumers’ assessment of both current business and labour market conditions was considerably more favourable than last month,” Lynn Franco, the Conference Board’s head of economic indicators.
“Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”
Increases in consumer confidence typically indicate more people are willing to spend money. As more than two-thirds of the US economy is generated by consumer spending, the increase signals likely economic growth.
Labour market strength
The percentage of Americans who expect business conditions to continue to improve over the in the next six months rose from 15.7% to 17.3%, while the number who expected worsening conditions fell from 12.4% to 11.1%.
The figure beat expectations by analysts, who predicted consumer confidence would stand at 97 on the index.
Earlier on Tuesday, the Federal Reserve’s vice-chairman, Stanley Fischer, said in an interview with Bloomberg News that the US labour market was close to full strength.
Mr Fischer did not say whether the improvements in the labour market meant the Fed would increase interest rates at its upcoming meeting in September.