The improvement tallies with easing pressure from spending on essentials, giving people more money in their pocket.
Overall essential spending fell by around 0.5 per cent on a year ago, the first decrease in the history of the Spending Power Report.
The decrease was driven by further falls in spending on gas and electricity, food and drink and fuel.
Overall men were more positive than women around their employment situation, while sentiment around job security also improved in July.
Patrick Foley, chief economist at Lloyds Bank, said: "July's welcome recovery in sentiment comes against a backdrop of continued good news on the economy, most visible in the positive employment outlook.
"However, with official data pointing to continued weakness in wage growth, the easing pressure on household budgets from spending on essentials provides an important support for consumers to undertake discretionary purchases."
Philip Robinson, director of personal current accounts at Lloyds Bank, said: "It's not a bad time to make sure we're all putting enough away for a rainy day or starting to get ready for a rise in interest rates."
Each month, more than 2,000 consumers are asked about their current and future spending habits and how their commitments affect their spending power.