US consumer confidence surges in August

The Conference Board's index of consumer confidence rose much more than expected in August, coming in at 101.5 (forecast: 93.0; consensus: 93.4) from an upwardly revised July reading of 91.0 (initial: 90.9).

The August rise was due to an increase in both household readings on the present situation and by a jump in expectations. Expectations rose to 92.5 (previous: 82.3), a sharp bounce back from July's weak reading. The present situation component rose to115.1 (previous: 104.0).

Labor market sentiment also improved nicely following previous deterioration. The labor market differential, which measures the share of consumers who thought jobs were plentiful less those who thought they were hard to get, rose to 0.0 (previous: -7.5). Elsewhere in the details of the survey, indicators of purchasing sentiment declined modestly.

Automobile purchase plans declined to 10.6 (previous: 11.8), home buying sentiment fell to 4.1 from 5.9, the lowest reading since early 2013. Plans to purchase major appliance fell slightly but remains at a high level (48.9, previous: 52.1).

The gain in confidence was spread across all income groups, with those making less than $50k per year showing the largest improvement.

"The rebound in this month's survey is reassuring given the recent volatility in financial markets and the sharp decline in confidence observed last month, which was driven in part by concerns over Chinese growth. In addition, after a weak employment outlook last month, consumers were considerably more confident in the job market in August, giving us confidence in our positive employment outlook. Of course, this month's survey predominately reflects data collected before the recent fall in equity markets", says Barclays.