US consumer spending advanced 0.5 per cent in February, underlying inflation slowed, and weekly jobless claims posted an unexpected jump, government data showed today.
US government bonds took heart from the weaker employment reading, which showed a 20,000 rise in new claims last week to 350,000. Analysts had expected jobless claims to decline.
Bond investors were also calmed by separate news that the increase in the core price index for consumer expenditure, one of Federal Reserve Chairman Alan Greenspan's favorite measures of inflation, slowed last month.
The Commerce Department said the price index for consumer expenditure climbed 0.3 per cent after rising 0.2 per cent in January. Analysts had expected the Personal Consumption Expenditures (PCE) price index to show another 0.2 per cent rise.
But stripping out the volatile effect of food and energy prices, the core PCE index advanced only 0.2 per cent in February after a 0.3 per cent increase the previous month. It is up 1.6 per cent than a year ago, unchanged from January's reading.
Investors are on watching out for signs of higher prices after the Fed conceded last week that inflation risks had grown as it upped interest rates a quarter percentage point to 2.75 per cent.
Inflation is feeling the heat of soaring oil prices, and analysts worry these could also dent household budgets, although evidence that this has dimmed the appetite of American shoppers remains scant.