US consumer spending was unexpectedly flat in April, but real disposable incomes recorded their biggest increase in nearly a year as the labour market improved and inflation remained muted, a government report showed today.
The Commerce Department said spending was the weakest since September, when it fell 0.6 per cent, after increasing by an unrevised 0.6 per cent in March.
Despite April's flat reading, analysts expect strong spending in the second quarter as a firming labour market boosts household incomes.
Government data yesterday showed real consumer spending rose at a 3.5 per cent annual rate in the first quarter, more than double the 1.6 per cent pace in the October-December period.
Spending adjusted for inflation was also flat in April after a 0.5 per cent increase the prior month, the Commerce Department said.
Personal income rose 0.4 per cent, the report showed, after rising by the same margin in March. Markets had expected income to rise 0.5 per cent last month.
Real disposable income increased 0.5 per cent in April, the largest rise since May, after a 0.3 per cent gain the prior month. The rise in income prompted households to build savings. The saving rate rose to 3.6 per cent from 3.1 per cent in March.
Savings rose to an annual rate of $398.5 billion. The report also showed the personal consumption expenditures price index, excluding food and energy, rising 1.2 per cent in the 12 months to April, the smallest rise since September.
The index, which is a key inflation gauge monitored by the Federal Reserve, increased 1.3 per cent in March.
Reuters