Economy report

Economists were expecting the index to increase to 48 The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

The index posted declines in June and July,despite August's increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

The percentage of respondents expecting more jobs in the next six months rose to 18.4% from 15.5%.

Similarly, those saying jobs are "hard to get" slipped to 45.1% from 48.5% in August, while responses that jobs are "plentiful" ticked up to 4.2% from 3.7%.

Earlier this month the Labor Department reported that 247,000 jobs were lost in July and the unemployment rate fell to 9.4% from 9.5% in June -- the first decline in more than a year.

According to government figures, 237,000 fewer people were unemployed last month. That decline could be due to discouraged job seekers who have stopped looking, people who have now retired, or those have gone back to school. But the rate does include people who have exhausted their unemployment benefits or do not collect them.

Income expectations. Consumers were only slightly more positive in their income expectations, Franco noted. Those expecting an increase in their incomes jumped to 10.6% from 10.1%.
Business conditions. Consumers anticipating business conditions to improve over the next six months increased to 22.4% from 18.4% in July, the report said.

Conversely, respondents expecting conditions to worsen in the months ahead slipped to 15.8% from 19%