The Bloomberg Consumer Comfort Index (COMFCOMF) rose to minus 23.5 for the period ended Aug. 4, its strongest reading since January 2008, a report today showed. The averagenumber of workers applying for jobless benefits declined to 335,500 in the four weeks ended Aug. 3, the least since November 2007, according to Labor Department data.

All income groups save one saw confidence improve last week, with the biggest advances coming at the lower end of the pay scale, signaling the job market is thawing for a bigger share of households. The decline in worker dismissals may be a precursor to a pickup in hiring, which will sustain household spending and give the expansion a lift for the rest of 2013.

“The labor market is probably the most important determinant of the rise in confidence,” said Jim O’Sullivan, the Valhalla, New York-based chief U.S. economist at High Frequency Economics, and the second-best forecaster of claims over the past two years, according to data compiled by Bloomberg. “If the labor market keeps chugging along, as it seems likely to do, consumer spending should start to pick up in the second half.”

Shares fluctuated between gains and losses, with the Standard & Poor’s 500 Index retreating after briefly topping 1,700. TheS&P 500 rose 0.1 percent to 1,692.68 at 11:54 a.m. in New York.

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 China reported much better than expected trade results for July on Thursday, marking a sharp recovery from the previous month.

Chinese trade data showed exports rising 5.1% from a year earlier, swinging from June’s 3.1% fall, the customs agency said.

Imports, which had dropped 0.7% in June, showed a 10.9% leap for July.

The results far exceeded expectations from a Reuters survey of economists….

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Institutional investors’ allocations to dollar-denominated bonds have dropped to the lowest level since 2007 as strategists at Morgan Stanley and JPMorgan Chase & Co. see a shift away from the debt that may fuel higher borrowing costs.

 Morgan Stanley’s $1.8 trillion wealth management unit has been advising clients to cut bond allocations to the lowest in more than five years. 

“Equities will outperform bonds over a seven-year timeframe because bond yields are already so low,” Darst, who oversees investment strategy at Morgan Stanley Wealth Management, said in a telephone interview. “We’ve got a slight underweight in junk bonds. We have a big underweight in corporate and government bonds.”

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The fewest workers applied for U.S. unemployment benefits over the past month since before the last recession, indicating the labor market is making progress.

The economy will expand at a 2.5 percent annualized rate from July through December, up from a 1.4 percent gain in the first six months of 2013 and little changed from the pace projected last month, according to a Bloomberg survey of 59 economists conducted Aug. 2 to Aug. 6.

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