Consumer confidence rose to a nearly six-year high in July as consumers perceived improvements in business conditions and the labor market, a report said on Tuesday.

The Conference Board said its index of consumer sentiment rose to 112.6 in July, the highest reading since August 2001 and above an upwardly revised 105.3 in June.

An improvement in business conditions and the job market has lifted consumers' spirits in July, said Lynn Franco, director of The Conference Board Consumer Research Center, in a press release.

The reading was well above expectations. The median forecast of economists polled by Reuters was for 105.0, up from an originally reported 103.9 in June.

Consumers' assessment of current conditions rose. The business research group's present situation index rose to 139.2 in July, the highest since August 2001 and up from 129.9 in June. The expectations index rose to 94.8 in July from 88.8.

Looking ahead, consumers are more upbeat about short-term economic prospects, mainly the result of a decline in the number of pessimists, not an increase in the number of optimists. This rebound in confidence suggests economic activity may gather a little momentum in the coming months, Franco said.

Consumers were more upbeat about the job market, the Conference Board said. Consumers surveyed who said jobs were plentiful rose to 30.5 percent in July from 27.6 percent in June. Those who said jobs were hard to get declined to 18.4 percent from 20.5 percent.

Consumers' expectations for the inflation rate 12 months from now slipped to 5.1 percent in July from a revised 5.4 percent in June.

Inflation