US consumers perk up in February

Consumer spending is the biggest driver of the US economy

US consumer confidence improved in February as rising wages and a better job market helped reassure people that an economic recovery was continuing.

The University of Michigan's consumer sentiment index rose to 88.9 points from 86.7 in January.

A separate Commerce Department report also showed higher consumer spending.

The Federal Reserve has been raising interest rates as the economy improves and analysts are trying to work out when the cycle of increases will stop.

Starting to believe?

Tuesday saw the latest increase in rates, when the Fed's new chairman, Ben Bernanke, lifted borrowing costs to 4.75%.

In its statement earlier this week, the Fed said that economic growth had "rebounded strongly".

Analysts expect one more hike in the coming months as the Fed tries to keep a lid on price growth.

According to the Commerce Department report, consumer spending rose by 0.1% in February.

While that may seem like a small amount, it comes after a surprisingly strong January. The report also showed that the average level of personal income rose by 0.3% during the month.

As a result, analysts said that the conditions for economic growth have remained good during the first three months of this year.

"The labour market has been strengthening for a while, but it may be that people are finally starting to become believers in it," said Patrick Fearon, an economist at AG Edwards & Sons.