US consumer spending was tepid in November and a gauge of business investment plans fell for a second month, pointing to some loss of momentum in the economy as the year ends.
The Commerce Department said consumer spending ticked up 0.1 per cent after rising by the same margin in October. Economists had expected spending, which accounts for two-thirds of US economic activity, to rise 0.3 per cent.
In another report, the department said non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 1.2 per cent last month after declining 0.9 per cent in October.
While the reports suggest some slowing in activity, they are unlikely to change perceptions that economic growth will top 3 per cent in the current quarter after a 1.8 per cent pace in July-September, boosted in part by a rebound in inventories.
US stock index futures pared gains on the data, while prices for US government debt trimmed losses. The dollar fell against the euro.
The tepid consumer spending is in stark contrast with robust Black Friday business reported by retailers.
When adjusted for inflation, spending rose 0.2 per cent last month after a similar gain in October. The government yesterday revised down third-quarter consumer spending growth to a 1.7 per cent annual pace from 2.3 per cent because of a slump in spending at hospitals.
Income ticked up 0.1 per cent last month, the weakest reading since August, after increasing 0.4 per cent in October. Last month's increase was below economists' expectations for a 0.2 per cent rise.
Taking inflation into account, disposable income was flat after rising 0.3 per cent in October.
"The lack of real income growth really raises questions as to what is going to happen to the economy in the first quarter," said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina.
The saving rate dipped to 3.5 per cent last month from 3.6 per cent in October. Savings slowed to annual rate of $400.9 billion from $419.1 billion the prior month.
The report showed subsiding inflation pressures, which should help to support spending.
A price index for personal spending was flat last month after falling 0.1 per cent in October. In the 12 months through November, the PCE index was up 2.5 per cent, the smallest rise since April. That followed a 2.7 per cent increase in October.
A core inflation measure, which strips out food and energy costs, edged up 0.1 per cent last month after a similar gain in October. In the 12 months through November, core PCE rose 1.7 per cent after increasing 1.7 per cent in October.
Reuters
