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Consumer spending rebounded in August as employment gains revived household earnings growth and encouraged Americans to return to shops and car dealerships.

Bloomberg reported that the 0.5% increase in purchases was more than forecast and followed little change in July, Commerce Department figures showed today in Washington. Incomes also advanced, rising 0.3% last month as wages and salaries climbed the most in three months.

Worker pay over the past 12 months is showing its biggest gains since the end of 2012. The pickup in spending that accounts for almost 70% of the economy will help put the expansion on firmer footing as the housing market shows signs of fatigue.

“The consumer looks to be in a fairly healthy position,” said Robert Stein, deputy chief economist at First Trust Portfolios LP in Wheaton, Illinois, and the second-best forecaster of consumer spending over the last two years, according to data compiled by Bloomberg. “The labor market is the key behind the income growth that we’re seeing.”

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