The index now stands at a similar level to August 2009, but remains significantly below the long-run average of 83.
The Expectations Index saw the biggest increase in August, rising by seven points to 84. This follows a fall of 43 points in the five months from February 2010.
Consumers' faith in the present situation continued its slow path upwards, with the Present Situation Index rising by one point for the third consecutive month.
Likewise, spending confidence rose during the month, rising by four points to 98 and reversing the fall seen in July.
In line with recent house price figures, consumers expressed increased pessimism towards the housing market in August. Consumers now expect the value of their home to decrease by 0.1% over the next six months - a decrease of half a percentage point from July's figure (+0.4%).
Mark Saddleton, Nationwide's head of economic and market analysis, said: "Consumers expressed greater optimism during August causing the index to recover some of the ground lost since its interim peak in February.
“The main driver behind the increase in August has been an uplift in confidence towards the future situation, in particular consumer expectations of future economic circumstances.
“While the indicators suggest the outlook may be starting to look a little brighter, faith in the present situation remains at a low level and growth in this area will play an important role in the strength of any recovery in confidence in the coming months.”
