US consumers spend slightly more
By Lucia Mutikani |
June 29, 2010, Tuesday
|
Print Edition
Print Edition
CONSUMER spending in the United States rose slightly more than expected in May even as savings touched their highest level in eight months, pointing to a recovery that remains on solid ground.
The Commerce Department said yesterday spending edged up 0.2 percent after being flat in April. Analysts polled by Reuters had expected consumer spending to rise 0.1 percent.
Consumer spending is being closely watched to gauge the strength of the economic recovery after a series of reports suggested growth is slackening.
"The data looks in line with a moderate consumer, neither cautious nor expansionary," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
US stock index futures were trading lower while Treasury debt prices pared gains slightly after the report. The dollar held gains against the euro.
A government report last Friday showed consumer spending, which normally accounts for 70 percent of US economic activity, rose at a 3 percent pace in the January-March quarter ?? slower than the 3.5 percent the government had estimated last month.
Spending adjusted for inflation gained 0.3 percent last month after being flat in April. Real spending on services added 0.3 percent, while spending on goods rose 0.2 percent, reversing the prior month's 0.1 percent decline, the department said.
Personal income rose 0.4 percent after gaining 0.5 percent in April. Markets had expected income to rise 0.5 percent last month.
Real disposable income climbed 0.5 percent following a 0.6 percent increase the prior month.
The saving rate rose to 4.0 percent from 3.8 percent in April. Savings increased to an annual rate of US$454.3 billion, the highest level since September. The report also showed the personal consumption expenditures price index, excluding food and energy, rising 1.3 percent in the 12 months to May.
The index, a key inflation measure monitored by the Federal Reserve, increased 1.2 percent in April. Fed officials would prefer to see inflation running closer to 2 percent.
On the month, the core PCE price index rose 0.2 percent.
The Commerce Department said yesterday spending edged up 0.2 percent after being flat in April. Analysts polled by Reuters had expected consumer spending to rise 0.1 percent.
Consumer spending is being closely watched to gauge the strength of the economic recovery after a series of reports suggested growth is slackening.
"The data looks in line with a moderate consumer, neither cautious nor expansionary," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
US stock index futures were trading lower while Treasury debt prices pared gains slightly after the report. The dollar held gains against the euro.
A government report last Friday showed consumer spending, which normally accounts for 70 percent of US economic activity, rose at a 3 percent pace in the January-March quarter ?? slower than the 3.5 percent the government had estimated last month.
Spending adjusted for inflation gained 0.3 percent last month after being flat in April. Real spending on services added 0.3 percent, while spending on goods rose 0.2 percent, reversing the prior month's 0.1 percent decline, the department said.
Personal income rose 0.4 percent after gaining 0.5 percent in April. Markets had expected income to rise 0.5 percent last month.
Real disposable income climbed 0.5 percent following a 0.6 percent increase the prior month.
The saving rate rose to 4.0 percent from 3.8 percent in April. Savings increased to an annual rate of US$454.3 billion, the highest level since September. The report also showed the personal consumption expenditures price index, excluding food and energy, rising 1.3 percent in the 12 months to May.
The index, a key inflation measure monitored by the Federal Reserve, increased 1.2 percent in April. Fed officials would prefer to see inflation running closer to 2 percent.
On the month, the core PCE price index rose 0.2 percent.
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